MINISTRY OF FINANCE OF THE REPUBLIC OF INDONESIA

DIRECTOR GENERAL OF TAXES REGULATION

NUMBER PER-10/PJ/2017

CONCERNING

THE APPLICATION PROCEDURE OF DOUBLE TAXATION CONVENTION

DIRECTOR GENERAL OF TAXES,

Considering : a. that the provision concerning the application procedure of

double taxation convention was previously regulated on
Director General of Taxes Regulation Number PER-
61/PJ/2009 concerning the Application Procedure of Double
Taxation convention as amended by Director General of Taxes
Regulation Number PER-24/PJ/2010;
b. that the provision concerning the prevention of abuse on the
double taxation convention was previously regulated in
Director General of Taxes Regulation Number PER-
62/PJ/2009 concerning the Prevention of Abuse of Double
Taxation convention as amended by Director General of Taxes
Regulation Number PER-25/PJ/2010;
c. that based on Article 32A of Law Number 7 year 1983
concerning Income Tax as lastly amended by Law Number 36
year 2008, it is stipulated that Government is authorized to
conclude an agreement with the government of foreign
countries in the context of avoidance of double taxation and
prevention of tax evasion;

d. that based on Article 24 paragraph (2) of Government

Regulation Number 94 year 2010 concerning the Calculation
of Taxable Income and the Settlement of Income Tax Payables
in the Current Year, it is necessary to amend the provision
concerning the application procedure of double taxation
convention;

e. that in order to provide legal certainty and to prevent any

 -2-

Application Procedure of Double Taxation Convention as

amended by Director General of Taxes Regulation Number
PER-24/PJ/2010 and Director General of Taxes Regulation
Number PER-62/PJ/2009 concerning the Prevention of Abuse
of Double Taxation Convention as amended by Director
General of Taxes Regulation Number PER-25/PJ/2010 shall
be amended;

f. that based on consideration set forth at point a, point b, point

c, point d, and point e, it is necessary to decree the Director
General of Taxes Regulation concerning the Application
Procedure of Double Taxation Convention;

In view of : 1. Law Number 6 year 1983 concerning General Provisions and

Taxation Procedures (State Gazette of the Republic of
Indonesia Number 49 year 1983, Supplementary to State
Gazette of the Republic of Indonesia Number 3262) as lastly
amended by Law Number 16 year 2009 (State Gazette of the
Republic of Indonesia Number 62 year 2009, Supplementary
to State Gazette of the Republic of Indonesia Number 4999);

2. Law Number 7 year 1983 concerning Income Tax (State

Gazette of the Republic of Indonesia Number 50 year 1983,
Supplementary to State Gazette of the Republic of Indonesia
Number 3263) as lastly amended by Law Number 36 year
2008 (State Gazette of the Republic of Indonesia Number 133
year 2008, Supplementary to State Gazette of the Republic of
Indonesia Number 4893);

3. Government Regulation Number 94 year 2010 concerning the

Calculation of Taxable Income and the Settlement of Tax
Payables in the Current Year (Supplementary to State Gazette
of the Republic of Indonesia Number 5183);

4. Minister of Finance Regulation Number 12/PMK.03/2017

concerning Income Tax Withholding and/or Collecting Slip
(State News of the Republic of Indonesia Number 248 year
2017);
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Stipulating : DIRECTOR GENERAL OF TAXES REGULATION CONCERNING

THE APPLICATION PROCEDURE OF DOUBLE TAXATION
CONVENTION.

CHAPTER I
GENERAL PROVISIONS

Article 1

In this Director General Regulation, the meaning of:

1. Income Tax Law, hereinafter referred to ITL, is Law Number 7
year 1983 concerning Income Tax as lastly amended by Law
Number 36 year 2008.
2. Double Taxation Convention, hereinafter referred to DTC, is
the agreement between Indonesian Government and other
Contracting Government or Contracting Jurisdiction for the
avoidance of double taxation and the prevention of tax
evasion.
3. Treaty Benefit is any benefit inside the DTC, which can be the
tax rate lower than the rate as prevailed in the ITL or the tax
exemption in the source country.
4. Non-Resident Taxpayer, hereinafter referred to NRT, is a non-
resident tax subject as referred to in the ITL that receive
and/or earn income sourced from Indonesia through or other
than through the permanent establishment in Indonesia.
5. Withholding Agent is a governmental body, resident tax
subject, event organizer, permanent establishment, or other
representative office of foreign company, which is obliged to
withhold tax on income received and/or earned by NRT.
6. Certificate of Domicile of Non-Resident Taxpayer, hereinafter
referred to CoD NRT, is a DGT-1 Form or DGT-2 Form, filled
by Non-Resident Taxpayer, and certified by the Competent
Authority from Contracting Country or Contracting
Jurisdiction in order to implement the DTC.
7. Certificate of Residence is a certificate in any name and any
form describing residential status of NRT for tax purposes,
 -4-

Authority from Contracting Country or Contracting

Jurisdiction.
8. The Officer who have the authority to certify CoD NRT or
Competent Authority, hereinafter referred to the Authorized
Officer is the officer who has the authority to certify the CoD
NRT and/or Certificate of Residence under the domestic law of
Contracting Country or Contracting Jurisdiction.
9. Custodian is an institution that has received approval from
the competent authority in Indonesia to provide custodial
services for securities and other securities-related assets and
other services, including receiving dividend, interests, and
other rights, conducting the settlement of securities
transactions, and representing account holders who become
their clients.
10. Agent is an individual or an entity acted as an intermediary
and acted for or on behalf of another party.
11. Nominee is an individual or an entity that legally owns assets
and/or income (legal owner) for the benefit of or under on the
mandate of the party who actually owns the assets and/or the
party who actually enjoy the benefit of income.
12. Conduit is a company who entitles the Treaty Benefit from
income arise in Indonesia, while economic benefit from that
income is owned by an individual or an entity in other country
who will not entitle the Treaty Benefit if that income is
received directly.

CHAPTER II
WITHHOLDING TAX OBLIGATION

Article 2

(1) Withholding Agent shall withhold tax in accordance with the

provisions stipulated in the ITL on income received or earned
by NRT.
(2) There shall be excluded from the provision as referred to in
paragraph (1), Withholding Agent shall withhold tax in
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a. there is a difference between the provisions stipulated in

the ITL and the provisions stipulated in the DTC;
b. income recipient is not an Indonesian resident tax
subject;
c. income recipient is an individual or an entity, which is a
resident tax subject of Contracting Country or
Contracting Jurisdiction;
d. NRT submit the CoD NRT that have qualified the
administrative requirements and other specific
requirements;
e. there is no treaty abuse; and
f. income recipient is a beneficial owner, in case stipulated
in the DTC.

CHAPTER III
THE PROCEDURE OF WITHOLDING AND/OR COLLECTING AND
REPORTING TAX

Article 3

(1) Withholding Agent shall make a withholding tax slip in

accordance with the regulation concerning the tax withholding
and/or collecting slip.
(2) In case there is an income received or earned by NRT however
there is no withholding tax for income received or earned in
accordance with the provisions stipulated in the DTC,
Withholding Agent still shall make a withholding tax slip.

Article 4

(1) Withholding Agent shall file the CoD NRT that have qualified
the administrative requirements and other specific
requirements as referred to in Article 2 paragraph (2) point d
as an annex of a Monthly Tax Return for the period of an
income tax is payable.
(2) In case of Withholding Agent fail to file the CoD NRT as
referred to in paragraph (1), the following provisions shall
 -6-

b. Withholding Agent shall withhold tax in accordance with

the provisions stipulated in the ITL.
(3) CoD NRT as referred to in paragraph (1) may be filed
electronically in accordance with the applicable regulations.

CHAPTER IV
WITHHOLDING TAX REFUND

Article 5

(1) In case:
a. there is a mistake in the implementation of the DTC; or
b. CoD NRT is filed after Withholding Agent filed a Monthly
Tax Return for the period a tax is payable,
Treaty Benefit still shall be entitled to NRT through refund
mechanism of excessive tax payment that should not payable.
(2) Treaty Benefit as referred to in paragraph (1) shall not be
entitled in case there is a treaty abuse.
(3) CoD NRT as referred to in paragraph (1) point b shall fulfill the
administrative requirements as referred to in Article 6
paragraph (1) point a, point b, point c, point d, and point e
and shall fulfill other specific requirements as referred to in
Article 8.
(4) In case NRT receiving or earning income sourced from
Indonesia:
a. does not obtain Treaty Benefit; and
b. Withholding Agent fail to file a Monthly Tax Return for
the period an income tax is payable,
Treaty Benefit still can be entitled to NRT through Mutual
Agreement Procedure (MAP) mechanism.

CHAPTER V
CERTIFICATE OF RESIDENCE OF NON-RESIDENT TAXPAYER
THAT FULFILL ADMINISTRATIVE REQUIREMENTS

Article 6
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a. using DGT-1 Form or DGT-2 Form;

b. being filled out correctly, completely; and clearly;
c. being signed or given an equal mark as a signature
according to the prevalence in the Contracting Country or
Contracting Jurisdiction;
d. being authorized with a signature or an equal mark as a
signature by the Competent Authority according to the
prevalence in the Contracting Country or Contracting
Jurisdiction;
e. being used in the period as stated in the CoD NRT; and
f. being filed by Withholding Agent concurrently with the
filing time of a Monthly Tax Return, no later than the due
date of a Monthly Tax Return submission for the tax
period a tax is payable.
(2) The signature mark given by the Competent Authority as
referred to in paragraph (1) point d is filled out in Part III DGT-
1 Form or Part III DGT-2 Form.
(3) The signature mark as referred to in paragraph (2) could be
replaced by Certificate of Residence that shall fulfill these
following requirements:
a. written in English;
b. in the form of original or copied document legalized by
the Tax Office in which one of the Withholding Agent is
registered as a Taxpayer;
c. at least stating information of NRT’s name, the issuance
date, and the taxable year the Certificate of Residence
shall come into force; and
d. stating the name of the Authorized Officer and being
signed or given an equal mark as a signature according to
the prevalence in the Contracting Country or Contracting
Jurisdiction.
(4) In case NRT uses the Certificate of Residence as referred to in
paragraph (3), NRT shall fill out DGT-1 Form other than Part
III or DGT-2 Form other than Part III.
(5) The period in the CoD NRT as referred to in paragraph (1)
point e is no later than 12 (twelve) months.
 -8-

(6) DGT-1 Form or DGT-2 Form is in the form as stipulated in

annex of this Director General Regulation.

Article 7

(1) DGT-1 Form shall be used by NRT who shall not use DGT-2
Form.
(2) DGT-2 Form shall be used by:
a. NRT receiving and/or earning income through the
Custodian in respect of income from transfer of shares or
bonds traded or reported in the Indonesian stock
exchange, other than interest and dividend;
b. Bank NRT; or
c. NRT in the form of pension funds.

CHAPTER VI
CERTIFICATE OF DOMICILE OF NON-RESIDENT TAXPAYER THAT
FULFILL OTHER SPECIFIC REQUIREMENTS

Article 8

CoD NRT fulfill the other specific requirements as referred to in

Article 2 paragraph (2) point d in case:
a. for NRT using DGT-1 Form, stating in the second page of the
form that he has:
1. relevant economic motives related to the establishment of
the entity;
2. business activities managed by its own management and
has sufficient authority to carry out the transactions;
3. fixed assets and non-fixed assets, sufficiently enough to
carry out business activities in the Contracting Country
or Contracting Jurisdiction other than assets that
generate income from Indonesia;
4. sufficient employees with enough expertise in line with
the business sector; and
5. activities or other active business other than only
receiving income from dividend, interest, and/or royalty
 -9-

b. for NRT using DGT-1 Form and acting as beneficial owner

based on the DTC, in addition to the fulfillment of the
provisions as referred to in point a, he shall also state in the
third page of the form that:
1. for an Individual NRT, NRT shall not act as an agent or
nominee; or
2. for an entity NRT, NRT shall not act as an agent,
nominee, or conduit and shall fulfill these requirements:
a) have control to use or to enjoy the funds, assets, or
rights that generate income from Indonesia;
b) no more than 50% of income is used to fulfill the
obligations to the other party;
c) assume risks from its own assets, capitals, and/or
obligations; and
d) do not have written or unwritten obligations to
provide a part or all of the income from Indonesia to
other party; and
c. for NRT using DGT-2 Form, NRT shall state in Part II of the
form that NRT:
1. is a tax subject in the Contracting Country or Contracting
Jurisdiction based on the tax law in that Country; and
2. shall not act as an agent, nominee, or conduit for the
income received, in case NRT is required by DTC as the
beneficial owner.

CHAPTER VII
TREATY ABUSE

Article 9

(1) Treaty Abuse as referred to in Article 2 paragraph (2) point e

occurs in case one or all of the main purpose of the
transaction arrangement is to obtain the Treaty Benefit and
contrary to the object and purpose of the DTC.
(2) Treaty Abuse as referred to in paragraph (1) shall not occur in
case NRT has:
 - 10 -

b. legal form is similar to economic substance in the

establishment of the entity or implementation of the
transaction;
c. business activities managed by its own management and
has sufficient authority to carry out the transactions;
d. fixed assets and non-fixed assets, sufficiently enough to
carry out business activities in the Contracting Country
or Contracting Jurisdiction other than assets that
generate income from Indonesia;
e. sufficient employees with enough expertise in line with
the business sector; and
f. activities or other active business other than only
receiving income from dividend, interest, and/or royalty
from Indonesia.
(3) Activities or other active business as referred to in paragraph
(2) point f is the activities or active business undertaken by
NRT in actual circumstances indicated by costs incurred,
efforts made, or sacrifices incurred that related directly with
the business or activity in order to obtain, collect, and
maintain income, including significant activities undertaken
by NRT to maintain the continuity of the entity.
(4) In case there is a difference between the legal form and the
economic substance in the structure/scheme of a transaction,
the tax treatment is applied according to the applicable
regulations based on its economic substance (substance over
form) as referred to in Article 9 paragraph (2) point a.

CHAPTER VIII
BENEFICIAL OWNER

Article 10

(1) NRT that fulfill the requirements as Beneficial Owner as

referred to in Article 2 paragraph (2) point f in case:
a. for an Individual NRT, NRT shall not act as an agent or
nominee; or
 - 11 -

1. have control to use or to entitle the funds, assets, or

rights that generate income from Indonesia;
2. no more than 50% of the income of the entity is used
to fulfill the obligations to the other party;
3. assume risks from its own assets, capitals, and/or
obligations; and
4. do not have written or unwritten obligations to
provide a part or all of the income from Indonesia to
other party.
(2) The income of the entity as referred to in paragraph (1) point b
number 2 is all of NRT income in any names, any forms, and
any sources in accordance with NRT’s non-consolidated
financial statements.
(3) To determine the value of 50% of income used to fulfill the
obligations as referred to in paragraph (1) point b number 2,
there shall not include:
a. compensation to employees fairly provided in the
employment;
b. other expenses commonly incurred in carrying out NRT
business; and
c. profit sharing in the form of dividend to the shareholders.

CHAPTER IX
OTHER PROVISIONS

Article 11

(1) In case an income recipient is a Government of Contracting

Country or Contracting Jurisdiction, a Central Bank, or
certain Institution whose names are explicitly stated in the
DTC or are agreed by Indonesian Tax Authorities and Tax
Authorities in the Contracting Country or Contracting
Jurisdiction, the DTC could be applied without using the
DGT-1 Form or DGT-2 Form.
(2) The income recipient as referred to in paragraph (1) shall file
the Certificate of Residence that fulfill the requirements in
 - 12 -

Jurisdiction that stated the income recipient is a party that

could be exempted from tax in source country on certain
income based on the DTC.
(3) Certificate of Residence or notification letter as referred to in
paragraph (2) could be used for the tax year stated in that
Certificate of Residence.

Article 12

To be able to implement the provisions stipulated in the DTC other

than the provision of income withholding tax, NRT shall file
Certificate of Residence that fulfill the requirements as referred to
in Article 6 paragraph (3) to the Tax Office whose working area
covers the residence, the place of business, or the place of domicile
of NRT in Indonesia.

CHAPTER X
TRANSITIONAL PROVISIONS

Article 13

At the time of this Director General Regulation come into force:

1. while the authorized Certificate of Residence based on Director
General of Taxes Regulation Number PER-61/PJ/2009
concerning the Application Procedure of Double Taxation
Convention as amended by Director General of Taxes
Regulation number PER-24/PJ/2010 has not been expired, it
still could be used until the expiration date;
2. Director General of Taxes Regulation Number PER-
61/PJ/2009 concerning the Application Procedure of Double
Taxation Convention as amended by Director General of Taxes
Regulation number PER-24/PJ/2010 shall be revoked and
declared no longer valid; and
3. Director General of Taxes Regulation number PER-
62/PJ/2009 concerning the Prevention of Abuses on Double
Taxation Convention as amended by Director General of Taxes
Regulation number PER-25/PJ/2010 shall be revoked and
 - 13 -

CHAPTER XI
CLOSING PROVISIONS

Article 14

This Director General Regulation shall come into force on 1 August

2017.

Approved in Jakarta
On 19 June 2017

DIRECTOR GENERAL OF TAXES,

Signed

KEN DWIJUGIASTEADI
NIP 195711081984081001
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ANNEX OF
DIRECTOR GENERAL OF TAXES
REGULATION
NUMBER PER-10/PJ/2017
CONCERNING THE APPLICATION
PROCEDURE OF DOUBLE TAXATION
CONVENTION

A. Provisions for Withholding Agent and Custodian.

1. Withholding Agent shall withhold taxes on any income received or earned by
NRT in accordance with the provisions stipulated in the ITL.
2. Withholding Agent shall make withholding tax slip in accordance with
prevailing provisions and procedures and shall be filed to the NRT.
3. Withholding Agent still shall make withholding tax slip even if there is no tax
withheld by stating the amount of gross income and stating “NIHIL” in the
column of income tax withheld. The withholding tax slip shall not be filed to
the NRT.
4. Withholding Agent shall file a Monthly Tax Return with an attachment of a
copy of legalized CoD NRT and withholding tax slip to the Tax Office.
5. Withholding Agent shall ensure that NRT has fulfilled the requirements as
referred to in Article 2 paragraph (2) of this Director General of Taxes
Regulation to be able to implement the provisions in the DTC. Withholding
Agent shall ensure the fulfillment of the requirements by verifying the CoD
NRT submitted by NRT.
6. Verification on the CoD NRT (DGT-1 Form or DGT-2 Form) to ensure that the
income recipient is not Indonesian resident tax subject shall be performed
by Withholding Agent. In case that the income recipient is an Indonesian
resident tax subject, Withholding Agent shall withhold tax payables in
accordance with the provisions stipulated in the ITL. The existence of
Indonesian resident tax subject for DGT-1 Form is determined by:
1) in Part V point 3 stating that NRT’s address is in Indonesia; or
2) in Part V point 6 stating that NRT has a permanent residency in
Indonesia; or
3) in Part V point 7 stating that NRT’s residence is in Indonesia; or
4) in Part VI point 1, 2, or 3 stating that the place of establishment, the place
of domicile, or the address of NRT’s head office is in Indonesia.
 - 15 -

7. Withholding Agent shall verify whether one or all of the main purposes of the
transaction or the arrangement of transaction’s scheme (arrangement) is to
obtain Treaty Benefit and contrary to the object and purpose of the DTC by
ensuring whether CoD NRT DGT-1 Form stating the answer:
1) “Yes” in Part V Point 4; or
2) “Yes” in Part VI Point 5.
DTC shall not be applied in case one of the answers from NRT receiving the
income is as in the point 1) or 2) above.
8. Withholding Agent shall verify whether or not there is an abuse of the DTC
by ensuring whether CoD NRT stating the answer “No” for one or all of the
questions from Point 7 to Point 10 in Part VI. The DTC shall not be applied
in case one or all of the answers from NRT receiving income is “No”.
9. Withholding Agent shall verify whether NRT is beneficial owner as required
in the DTC by ensuring whether CoD NRT DGT-1 Form stating the answer:
1) “Yes” in Part V Point 5; or
2) “Yes” in Part VII Point 1; or
3) “No” for one or all of the questions in Part VII Point 2 to Point 4; or
4) “Yes” in Part VII Point 5.
DTC shall not be applied in case one or all of the answer from NRT receiving
income is as in the point 1), 2), 3), or 4) above.
10. In case NRT receiving income is a Government of Contracting Country or
Contracting Jurisdiction, a Central Bank, or certain Institution whose
names are explicitly stated in the DTC or are agreed by Indonesian Tax
Authorities and Tax Authorities in the Contracting Country or Contracting
Jurisdiction, Withholding Agent shall ensure that the institution is the
institution referred in the DTC by verifying the CoD NRT and/or Certificate
of Residence and/or notification letter with the requirements as referred to
in Article 11 of this Director General Regulation.
11. For tax withheld in respect of income from transfer of shares or bonds traded
or reported in the Indonesian stock exchange, other than interest and
dividend received or earned by NRT through the Custodian:
a. DGT-2 Form shall be completely filled and signed or given an equal mark
as a signature according to the prevalence in the Contracting Country or
Contracting Jurisdiction, and shall be certified with a signature or an
equal mark as a signature by the Competent Authority according to the
prevalence in the Contracting Country or Contracting Jurisdiction;
 - 16 -

b. The original DGT-2 Form shall be submitted to the Custodian by NRT

receiving income;
c. The Custodian shall file the valid original DGT-2 Form received from the
NRT to the Withholding Agent;
d. In case NRT receiving the income receive income from many sources, the
Custodian could make a copy of the first page of DGT-2 Form and request
a legalization to the Head of the Tax Office in which the Custodian is
registered as a Taxpayer;
e. The Head of the Tax Office legalizing the copy of the first page of DGT-2
Form shall administer 1 (one) sheet of that legalization in the Tax Office,
and the original DGT-2 Form shall be returned to the Custodian;
f. In case there is a necessity for the implementation of Taxpayer compliance
supervision, tax audit, preliminary tax investigation, tax investigation, tax
objection, tax correction, tax deduction or annulment of administrative
penalties, deduction or annulment of incorrect notice of tax assessment,
or deduction or annulment of incorrect notice of tax collection, the
Custodian shall file the original DGT-2 Form in accordance with the
applicable tax laws;
g. Withholding Agent shall withhold taxes in accordance with the provisions
stipulated in the DTC based on the valid DGT-2 Form or the legalized copy
of the GDT-2 Form filed by the Custodian and the Custodian shall keep
the copy of the DGT-2 Form;
h. Withholding Agent shall make withholding tax slip and shall file it to NRT
through the Custodian.
12. For tax withheld from income received or earned by bank NRT and NRT in
the form of pension fund:
a. DGT-2 Form shall be completely filled and signed or given an equal mark
as a signature by NRT according to the prevalence in the Contracting
Country or Contracting Jurisdiction, and also shall be certified with a
signature or an equal mark as a signature by the Competent Authority
according to the prevalence in the Contracting Country or Contracting
Jurisdiction; and
b. The original DGT-2 Form shall be submitted by NRT to the Withholding
Agent.
13. In case the requirements as referred to in Article 2 paragraph (2) of this
Director General of Taxes Regulation could not be fulfilled by NRT,
 - 17 -

Withholding Agent shall withhold tax payables in accordance with the

provisions stipulated in the ITL.
14. CoD NRT and Certificate of Residence shall be kept by Withholding Agent in
accordance with the applicable tax laws.

B. The administration of CoD NRT by the Tax Office.

1. The officer receiving the Monthly Tax Return shall verify the completeness of
the Monthly Tax Return of Withholding Agent that at least shall be annexed
with withholding tax slip and a copy of legalized CoD NRT.
2. The Head of Tax Office verify the correctness of the amount of tax withheld by
matching the copy of legalized CoD NRT with the name of NRT stated in the
withholding tax slip.
3. In case Withholding Agent does not fulfilled its obligations pursuant to the
provisions stipulated in this Director General Regulation, the Head of the Tax
Office shall follow up in accordance with the applicable regulations.
4. In case there is an information in the CoD NRT indicating the existence of
NRT’s permanent establishment in Indonesia, the Tax Office shall send the
information to the authorized Tax Office to verify the correctness of the
information or to follow up the information in accordance with the applicable
regulations.
5. The CoD NRT and withholding tax slip filed by Withholding Agent shall be
recorded and administrated in accordance with the applicable regulations.