INTERNATIONAL TAXATION

(Review & Updates)

SUBAGIO EFFENDI, SST.MPF.,PhD (cand)

1
Outline
Introduction to International Taxation
Theory of Tax Treaty
Income Tax Article 26
Indonesia-Country Partners Tax Treaty
Multilateral Instruments
Applications of Tax Treaty
Case Studies

2
Class Pre-tests
1. Dibawah ini termasuk dalam ruang lingkup pajak
internasional?
a. Inbound income b. Outbound income
c. Semua benar
2. Apakah Bentuk Usaha Tetap dapat memanfaatkan tax
treaty?
(Ya / Tidak)
3. Kriteria bentuk usaha yang dikecualikan dari Bentuk
Usaha Tetap menurut tax treaty?
a. Promotion b. Market research c. Brokerage d.
Semua benar
4. Jika investor asing ingin berinvestasi di Indonesia,
bentuk entitas apakah yang paling optimal dari sisi
perpajakan?
a. Perseroan Terbatas (PMA) b. Bentuk Usaha Tetap c.
Semua salah
Cross-border transactions in Indonesia

Source: Indonesian Central Bank (2011)

Top 20 FDI Inflows/Host
Economies (Billion if USD)

Source: UNCTAD (2020)

Foreign Direct Investment in Indonesia

Source: Indonesia Investment Coordinating Board (2020)

 ASEAN Economic Community

ASEAN
Community 2015

ASEAN Socio- ASEAN

Culture Political
ASEAN
Community Security
Economic
Community
Community

7
7
 ASEAN Economic Community
Tax implications of ASEAN Economic Community
(AEC Blueprint)
Complete the network of Enhance withholding tax
bilateral agreements on structure, where possible, to
avoidance of double taxation promote the broadening of
among all Member Countries by investor base in ASEAN debt
2010, to the extent possible issuance

Note:
• Indonesia belum memiliki P3B dengan Myanmar, Kamboja dan Laos;
• Struktur withholding tax Indonesia belum harmonis dengan negara
ASEAN lainnya.
8
8
Introduction to International Taxation
IBFD International Tax Glossary 5th Ed. (2005)
- Traditionally refers to treaty provision relieving
international double taxation
- In broader terms, it includes domestic legislation
covering foreign income of residents (worldwide
income) and domestic income of non residents.

Brian Arnold, International Tax Primer (1995)

“…the international aspects of the income tax laws
of particular countries.”

9
Introduction to International Taxation
Residency

2 3
Foreign
International Extra
taxation Territorial

Income Income
1 4
Domestic Domestic International
taxation taxation

Domestic Foreign
Residency 10
Introduction to International Taxation

TAXPAYER SOURCE OF TERMS

INCOME

Domestic Foreign Taxing Inbound Income

Foreign Domestic Taxing Outbound Income

11
Introduction to International Taxation
Principles of Taxation
Legal Factual
Connection Connection
Introduction to International Taxation
Principles Justification of Taxation

Legal Factual/Economic
Connection Connection

Nationality √ X

Territoriality X √

Residence √ √

Source X √

Citizenship √ X
Introduction to International Taxation
Residence
Principle

2 3
Foreign
Extra
International Territorial
Taxation
Income
1 4
Domestic International
Domestic Taxation
Taxation Source
Principle

Residents Residency Non-Residents

Introduction to International Taxation
Double Taxation
Type of double taxation
 Economic/Juridical Double Taxation
 International/Domestic Double Taxation

Economic Concept
DOUBLE TAXATION

Juridical Concept

International
International
Concept
Juridical/(Economic) Double
Domestic Concept Taxation
 Introduction to International Taxation
Residence – Source Conflict
Double taxation occurs since one country impose
income tax based on source principle and the other
country apply residence principle to the same income

X Corp.

Loan Country X

Indonesia
Interest
PT ABC

16
Introduction to International Taxation
Residence – Residence Conflict
Double taxation occurs since both countries
impose income tax to a taxpayer who
categorized as domestic taxpayer

Mr. Walker Domestic Taxpayer of Country X

Country X

Indonesia
Working in
Indonesia for
more than 183 Domestic Taxpayer of Indonesia
days

17
Introduction to International Taxation
Source – Source Conflict
Double taxation occurs since both countries impose
income tax on income which categorized as domestic-
sourced income

Country P
Record copyright expense and payable

P Corp. ABC Branch

Country X
Invoice Country Y

Copyright fee
ABC
Record receivable and cash

18
Introduction to International Taxation
Relieving Double Taxation

• The “Laffer Curve” of international taxation;

• International tax governance is a coordination-
game with distributive conflict;
• A single taxation is globally optimum.
Introduction to International Taxation
Relieving Double Taxation
1. Domestic tax law (unilateral)

2. Tax Treaty (bilateral)

3. Multilateral Tax Convention

4. Arbitration
Income Tax Article 26
Imbalan
sehubungan
Hadiah dan
dengan jasa,
pekerjaan, dan penghargaan
Royalti, sewa, dan kegiatan Pensiun dan
penghasilan lain pembayaran
sehubungan
dengan berkala
penggunaan harta lainnya

Bunga termasuk Premi swap

premium, diskonto,
dan imbalan dan transaksi
sehubungan dengan lindung nilai
jaminan
pengembalian utang lainnya

Dibayarkan,
disediakan untuk
dibayarkan, atau keuntungan
telah jatuh tempo karena
Dividen pembayarannya pembebasan
kepada Wajib utang
Pajak Luar Negeri
selain BUT

Dipotong PPh 20%

THEORY OF TAX TREATY
Pasal 32A Undang-Undang Pajak Penghasilan
“Pemerintah berwenang untuk melakukan perjanjian dengan
pemerintah negara lain dalam rangka penghindaran pajak berganda dan
pencegahan pengelakan pajak”

Penjelasan:

Dalam rangka peningkatan hubungan ekonomi dan perdagangan

dengan negara lain diperlukan suatu perangkat hukum yang berlaku
khusus (lex-spesialis) yang mengatur hak-hak pemajakan dari masing-
masing negara guna memberikan kepastian hukum dan menghindarkan
pengenaan pajak berganda serta mencegah pengelakan pajak. Adapun
bentuk dan materinya mengacu pada konvensi internasional dan
ketentuan lainnya serta ketentuan perpajakan nasional masing-masing
negara.
THEORY OF TAX TREATY
Pasal 55 Peraturan Pemerintah No. 74 Tahun 2011
tentang Tata Cara Pelaksanaan Hak Dan
Pemenuhan Kewajiban Perpajakan

“Pemerintah Indonesia terikat P3B yang dilakukan

dengan pemerintah negara mitra atau yurisdiksi
mitra P3B”
 INDONESIA TAX TREATY NETWORK
1970s 1980s 1990s 2000 2001 2002 2003 2004 2005 2007 2008 2011 2013 Next…

•Netherlands •Canada •Finland •Spain •Algeria •Slovak •Egypt •China •North Korea •Bangladesh •Portugal •Iran •Hong Kong 5 Countries
•Belgium •France •Switzerland •UAE •Mongolia •Russia •Mexico •Qatar •Maroko waiting for
•UK •Thailand •South Korea •Romania •Turkey •Brunei D. notifications.
•Germany •Philippines •Sweden •Vietnam •Venezuela •Kroasia
•Japan •Norway •Sudan •Zimbabwe
•Denmark •Pakistan •Seychelles •Suriname
•Malaysia •USA •Papua
•India •Singapore Nugini
•Austria •Bulgaria • Belaruz
•New •Australia
Zealand •Hungary
•Saudi Arabia •Tunisia
•Poland
•Luxembourg
•Sri Lanka
•Italy
•Taiwan
•Czech
•Ukraine
•Uzbekistan
•Jordan
•Kuwait
•Syria
•South Africa

 71 tax treaties are in force since 1973 (72 tax treaties are signed)
 Indonesia-Mauritius tax treaty was terminated since January 1, 2005
(SE-06/PJ.03/2004)
TAX INFORMATION EXCHANGE
AGREEMENT

Eight TIEAs with Low Tax

Jurisdictions

Signing process Ratification process

➢ San Marino (September 27, 2010 )
➢ Costa Rica (December 8, 2010)
➢Cayman Island (December 10, 2010)
➢ Bahamas (December 13, 2010)
➢Jersey (April 27, 2011)
➢ Guernsey (April 27, 2011)
➢ Isle of Man (June 22, 2011)
➢ Bermuda (June 22, 2011 )
 MULTILATERAL TAX CONVENTION

54 Treaty Partners

Tax Treaty Network (33) Non Tax Treaty Network (21)

1 Afrika Selatan 12 Italia** 23 Portugal 1Albania 12Islandia**

2 Amerika Serikat** 13 Jepang 24 Romania 2Argentina** 13Kolombia
3 Arab Saudi* 14 Jerman 25 Rusia 3Azerbaijan** 14Kosta Rika**
4 Australia** 15 Kanada 26 Selandia Baru 4Belize** 15Latvia
5 Austria 16 Korea Selatan** 27 Singapura 5Brazil 16Lithuania
6 Belanda** 17 Luxembourg 28 Slovakia 6Ceko, Republik 17Malta**
7 Belgia** 18 Meksiko** 29 Spanyol** 7Estonia 18Moldova**
8 Denmark** 19 Moroko 30 Swedia** 8Georgia** 19Nigeria
9 Finlandia** 20 Norwegia** 31 Tunisia 9Ghana** 20Slovenia**
10 India** 21 Perancis** 32 Turki 10Guatemala 21Yunani**
11 Inggris** 22 Polandia** 33 Ukraina** 11Irlandia

26
 TAX TREATY MODEL

1. Organization for Economic Co-

Operation and Development (OECD)
Model & Commentary (1963, 1977,
1992, 1998, 2003, 2000, 2005, 2010);
2. United Nations (UN) Model &
Commentary (1980, 2001, 2011);
3. United States (US) Model & Technical
Explanation (1981, 1996, 2006).
TAX TREATY STRUCTURE (OECD MODEL)
Article Title Type
1 Personal Scope Scope
2 Taxes Covered Scope
3 General Definitions Definisi
4 Resident Definisi
5 Permanent Establishment Definisi
6 Immovable Property Substansi
7 Business Profits Substansi
8 Shipping Substansi
9 Associated Enterprise Anti-avoidance
10 Dividend Substansi
11 Interest Substansi
12 Royalties Substansi
13 Capital Gain Substansi
14 [Independent Personal Services] Substansi
15 Dependent Personal Services Substansi
16 Directors Substansi
28
TAX TREATY STRUCTURE (OECD MODEL)
Article Title Type
17 Artistes & Sportsmen Substansi
18 Pensions Substansi
19 Government Services Substansi
20 Students Substansi
21 Other Income Substansi
22 Capital Substansi
23 Elimination of Double Taxation Metode menghilangkan pajak berganda
24 Non Discrimination Lain-Lain
25 Mutual Agreement Procedure Metode menghilangkan pajak berganda
26 Exchange of Information Anti-avoidance
27 Diplomats Lain-Lain
28 Territorial Extension Lain-Lain
29 Entry into Force Scope
30 Termination Scope
29
 Indonesia-Partners Tax Treaty
AGREEMENT BETWEEN THE GOVERNMENT OF THE
REPUBLIC OF INDONESIA AND PARTNERS FOR THE
AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION
OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
AND CAPITAL
Article 1 & 2 – Scope

Personal Persons which

Scope are residents

Scope
Income Taxes
Taxes
Coverage
Tax on
Capitals
Article 4 – Resident
any person who, under the laws of that country, is
liable to tax therein by reason of his domicile,
Residents
residence, place of management, place of
incorporation or any other criterion of a similar nature

Orang pribadi yang bertempat tinggal di Indonesia,

berada di Indonesia > 183 hari dalam jang ka waktu
Residents of 12 bulan, atau berada di Indonesia dan berniat
Indonesia bertempat tinggal di Indonesia.
(UU PPh)

Badan yang didirikan atau bertempat kedudukan di

Indonesia.
 Tie-breaker for Dual Resident
Individuals (OECD & UN Model)
Does the individual have a permanent home in one or both States?
YES 1
Does he have a permanent home in the two NO He is a resident of the State where he
States? has a permanent home
YES
NO Can the State where he has his center of vital YES
interests be determined He is a resident of the State where he
NO 2 has his center of vital interests

Does he normally stay (“have an habitual YES He is a resident of the State where
abode”) in only one of the two States? he has an habitual abode
NO 3
YES He is a resident of the
Is he a national of only one of the two States? State of which he is a
national
NO 4
The competent authorities will settle the case by mutual agreement
5
Article 5 – Permanent Establishment

a place of management, a branch, an office, a factory, a

Para. 2 workshop, a farm or plantation, a mine, an oil or gas well, a
(PE List)
quarry or any other place of extraction of natural resources

a building site, a construction, assembly or installation project or

Para. 3 supervisory activities→ 6 months / 183 days
(Time Test) the furnishing of services→ 90 days/183 days/6 months

Para. 4 exclude ‘delivery’ activities

(Preparatory &
Auxiliary)
➢ has and habitually exercises in that country an authority to conclude contracts
in the name of the enterprise;
Para. 5 ➢ habitually maintains in the first mentioned country a stock of goods or
merchandise from which he regularly delivers goods or merchandise on behalf
(Agent PE) of the enterprise

No Service PE clause (Germany) & No insurance PE clause (Hong Kong)

Article 7 – Business Profits

only on so much of such profits as are attributable to the permanent

establishment

derived from sources within such other Contracting State from sales of goods or
merchandise of the same kind as those sold

...dividends, interests, royalties are paid is effectively connected with a

permanent establishment or a fixed base situated in that other country.
See related article 10,11 &12
PE’s Taxable Income
 No PE – No Tax;
 Factual attribution (income form
business activities and/or assets);
 Effectively-connected Income.

(OECD Model, 2010)

 Force of attraction (general and
restricted) - (UN Model, 2011)
PE’s Taxable Income;
Indonesian Income Tax Law
Taxable object of a permanent establishment consists of:
a. Income from its businesses or activities and from its owned
or controlled properties (factual attribution);
b. Income of the head office from businesses or activities, sales
of goods, or furnishing services in Indonesia which are
similar to those undertaken by the permanent
establishment in Indonesia (restricted-force of attraction);
c. Income received or accrued by the head office provided that
the properties or activities giving rise to the aforesaid
income is effectively connected with a permanent
establishment (effectively-connected income).
(Article 5 Indonesian Income Tax Law)
Factual attribution
Philips GmBH

Germany

Income Indonesia

BUT
Sales Product “X”
Income Philips

Assets

PT PQR

PT ABC
Effectively-connected income

Sherry GmBH

License
Germany Agreement
Royalty & fee
Management
Indonesia
Agreement

BUT
PT ABC
Sherry
Hotel & Resorts
 Force of Attraction (restricted)

Income Unilever GmBH

Germany

Indonesia
Sales Product “X” BUT
Income
Unilever

Sales Product “X”

PT ABC PT PQR
PE’s Taxable Income
Attributions Germany China Singapore Thailand Hong
Clause
Kong
Factual √ √ √ √ √
Attribution
Force of X √ X √ √
Attraction
Effectively- √ √ √ √ √
Connected
Income
Article 6 – Income from Immovable Property

Income derived by a resident of a Contracting Party

from immovable property (including income from
agriculture or forestry) situated in the other Contracting
Party may be taxed in that other Party

income derived from the direct use, letting, or use in any

other form of immovable property
Article 8 – Income from Shipping & Aircraft

Income derived by an enterprise of a Contracting

State from the operation of aircraft in international
traffic shall be taxable only in that Contracting
State

Taxable only in resident

Income from from the
operation of ships in
international traffic
country
May be taxable in source
country but shall be
reduced by an amount
equal to 50% thereof
Article 9 – Associated Enterprise
Where :
a) an enterprise of a Contracting State participates
directly or indirectly in the management, control or
capital of an enterprise of the other Contracting
State, or
b) the same persons participate directly or indirectly in
the management, control or capital of an enterprise
of a Contracting State and an enterprise of the
other Contracting State,
and in either case conditions are made or imposed
between the two enterprises in their commercial or
financial relations which differ from those which would
be made between independent enterprises, then any
profits which would, but for those conditions, have
accrued to one of the enterprises, but, by reason of
those conditions, have not so accrued, may be included
in the profits of that enterprise and taxed accordingly
Article 10, 11, & 12 (Passive Incomes)

Passive Germany China Singapore Thailand Hong

Incomes Kong
Dividend 10/15% 10% 10/15% 15/20% 5/10%

Interest 10% 10% 10% 10/15/25% 10%

Royalties 7,5/10/15% 10% 15% 15% 5%

Beneficial owner clause..!!

Article 13 – Capital Gains
Capital Gains

Harta Tidak Hak Pemajakan pada Negara tempat Hata

Bergerak terletak (locus situs)

Harta
Terkait BUT Negara tempat harta terkait BUT tersebut

Harta
Bergerak
(termasuk Negara Domisili
Kapal dan
Pesawat)

Harta
Lainnya Negara tempat alienator
Article 14 – Independent Personal Service

Income derived by a resident of a Contracting State in respect of

professional services or other activities of an independent character
shall be taxable only in that State unless he is present in the other
Contracting State for a period or periods exceeding in the
aggregate 90 days in any twelve-month period. If he remains in
that other State for the aforesaid period or periods, the income may
be taxed in that other State but only so much of it as is derived in
that other State during the aforesaid period or periods.
Article 15 – Employment Income

Remuneration derived by a resident of a Contracting State in respect

of an employment exercised in the other Contracting State shall be
taxable only in the Resident Country, if:
a) the recipient is present in that other Contracting State for a period
or periods not exceeding in the aggregate 183 days in the
calendar year concerned; and
b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of that other Contracting State; and
c) the remuneration is not borne by a permanent establishment or a
fixed base which the employer has in that other Contracting State.
Time Test
Time Test Germany China Singapore Thailand Hong
(days) Kong
Service PE --- 6 months 90 6 months 183

Construction 6 months 6 months 183 6 months 183

PE
Independent 120 183 90 183 183
Personal
Service
Employment 183 183 183 183 183
Income
Article 16 – Directors’ Fees

Directors' fees and other similar payments derived by

a resident of the country of a Contracting Party in his
capacity as a member of the board of directors or
any other similar organ of a company which is a
resident of the country of the other Contracting Party
may be taxed in that other country
Article 17 – Artist and Athlete

income derived by an entertainer, such as a theatre,

motion picture, radio or television artiste, and a
musician, or by an athlete, from his personal activities as
such may be taxed in the Contracting State in which
these activities of the entertainer or athlete are
exercised

where income in respect of personal activities as such of

an entertainer or athlete accrues not to that entertainer
or athlete himself but to another person, that income
may be taxed in the Contracting State in which the
activities of the entertainer or athlete are exercised
Article 21 – Other Income

Income not dealt with in the foregoing Residence

Articles shall be taxable only in the country
Party of domicile taxation

Items of income of a resident of the country of a Contracting Party, wherever

arising, not dealt with in the foregoing Articles of this Agreement shall be
taxable only in that country.
Article 23 – Elimination of Double Taxation

Elimination
of Double
Taxations Direct Foreign Tax Credit
(with country limitation)

Indirect/Underlying
Foreign Tax Credit

Tax Sparing Credit

Article 25 – Mutual Agreement Procedure
Where a person considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in
accordance with the provisions of this Agreement, he may,
irrespective of the remedies provided by the domestic laws of those
Contracting States, present his case to the competent authority of the
Contracting State of which he is a resident or, if his case comes
under paragraph 1 of Article 24, to that of the Contracting State of
which he is a national. The case must be presented within three
years from the first notification of the action resulting in taxation not
in accordance with the provisions of this Agreement
 Mutual Agreement Procedure
(PMK 49/03/2019)
▪ MAP adalah prosedur administratif
yang diatur dalam P3B untuk
menyelesaikan permasalahan yang
timbul dalam penerapan P3B;
▪ Persetujuan Bersama adalah hasil yang
telah disepakati dalam penerapan P3B
oleh pejabat yang berwenang dari
Pemerintah Indonesia dan pemerintah
Negara Mitra atau Yurisdiksi Mitra P3B
sehubungan dengan MAP yang telah
dilaksanakan.
Mutual Agreement Procedure
(PMK 49/03/2019)
▪ Pengenaan pajak oleh Otoritas Pajak Mitra P3B yang mengakibatkan
terjadinya pengenaan pajak berganda yang disebabkan oleh:

a. koreksi Penentuan Harga Transfer;

b. koreksi terkait keberadaan dan/atau laba Bentuk Usaha Tetap;

dan/atau

c. koreksi obyek pajak penghasilan lainnya;

▪ Pengenaan pajak termasuk pemotongan atau pemungutan pajak

penghasilan di Mitra P3B yang tidak sesuai dengan ketentuan yang
diatur dalam P3B;

▪ Penentuan status sebagai subjek pajak dalam negeri oleh Otoritas

Pajak Mitra P3B;

▪ Diskriminasi perlakuan perpajakan di Mitra P3B; dan/atau

▪ Penafsiran ketentuan P3B.

56
 Mutual Agreement Procedure
(PMK 49/03/2019)

Ketidaksepakatan:
• Perundingan menghasilkan kesepakatan untuk
membuat Persetujuan Bersama yang berisi
ketidaksepakatan
• Perundingan tidak menghasilkan kesepakatan sampai
dengan berakhirnya batas waktu
Ketentuan lainnya: • Perundingan dilaksanakan bersamaan dengan proses
• MAP dapat diajukan bersamaan dengan permohonan banding dan sampai dengan putusan banding
keberatan, banding, atau pengurangan atau perundingan belum menghasilkan kesepakatan
pembatalan skp yang tidak benar sepanjang materi • Telah terlampauinya daluwarsa penetapan
yang diajukan MAP tercakup dalam materi sengketa sebagaimana diatur dalam Undang-Undang KUP untuk
• MAP tidak menunda kewajiban membayar pajak yang tahun pajak, bagian tahun pajak, atau masa pajak yang
Permohonan: terutang dan pelaksanaan penagihan pajak dicakup dalam permintaan pelaksanaan MAP
dan perundingan belum menghasilkan kesepakatan
• Diajukan secara tertulis dalam Bahasa Indonesia • Wajib Pajak dalam negeri mengikuti program
• Mengemukakan ketidaksesuaian penerapan P3B pengampunan pajak
• Diajukan sesuai dengan jangka waktu yang diatur
dalam P3B atau 3 tahun sejak tanggal skp
• Ditandatangani oleh Wajib Pajak atau kuasanya
• Dilampiri dengan surat keterangan domisili dan daftar
informasi atau bukti/keterangan
• Disampaikan ke KPP tempat terdaftar atau Direktur
Perpajakan Internasional

57
Mutual
Agreement
Procedure
(PMK 49/03/2019)

58
 1. Paragraph 3a of Article 18 of Income Tax Law;
2. Tax treaty(MAP Article) 1. Domestic and international related
3. Government Regulation Number 74 of 2011; party transactions
4. Director General of Taxes Regulation Number 2. All related party transactions or
69/PJ/2010; only part of related party
5. Minister of Finance regulation 22/03/2020 transactions
3. Unilateral or Bilateral
Legal
Basis Scope

The APA shall not

Ad hoc team appointed
preclude DGT to
by DGT
APA perform audit

1. Agreed periods with renewal possibility

Books, data, or information from taxpayer 2. Roll back possibilities provided that
would not be: annual tax return:
 disclosed to other parties a. has not been audited,
 used as basis for tax audit or b. has not been filed for objection or
investigation appeal,
Legal firewall: c. has not been found an indication of
❖Article 34 of General Provisions and tax crime
Procedures of Taxation Law
❖Article 58 of Government Regulation Period & Roll
Number 74 of 2011 Back
Confidentiality

59
APA TIMEFRAME (BILATERAL)
(PMK 22/03/2020)

Pre-lodgment Formal
meeting Application Discussion
1 3 months
2 3
Lodge pre- Request for
Documents, Acceptance or Lodge formal “G to G”
lodgment meeting, Refusal Notification
bilateral APA to
application Negotiations
request other CA
Additional Data &
APA-1 Information, Site APA TEAM Tax Payer may be
cc : Tax Visit, APA-2 asked to provide
Office ESTABLISHED additional
AND IN-CHARGE documents/inform
ation

Final APA Implementation and Monitoring

4 5 3 years
20 days
Final APA
Annual Report Review and Renewal or
Agreemen Draft the Signed by Evaluation Cancellation
Renewal
Cancel
(within 4 months Possibility
t Achieved final APA CAs and Tax Possibility Notification
Payer end of the year)

60
Article 26 – Exchange of Information
The competent authorities of the Contracting Parties shall exchange
such information as is foreseeably relevant for carrying out the
provisions of this Agreement or to the administration or enforcement
of the domestic laws of the Contracting Parties concerning taxes
covered by this Agreement, insofar as the taxation thereunder is not
contrary to the Agreement. The exchange of information is not
restricted by Article 1.

EOI EOI EOI Join-audit

• On-request • Automatic • Spontaneous • Simultaneous

tax
examination
Multilateral Instruments for Tax Treaties
Multilateral Instruments for Tax Treaties
MLI and Tax Treaties
 Article 4-Dual Resident Entity
Article 4 Tax Treaty:
Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be a
resident only of the State in which its place of effective management is situated.

Multilateral Instrument:
Where by reason of the provisions of a Covered Tax Agreement a person other than an
individual is a resident of more than one Contracting Jurisdiction, the competent
authorities of the Contracting Jurisdictions shall endeavour to determine by mutual
agreement the Contracting Jurisdiction of which such person shall be deemed to be a
resident for the purposes of the Covered Tax Agreement, having regard to its place of
effective management, the place where it is incorporated or otherwise constituted and
any other relevant factors. In the absence of such agreement, such person shall not
been titled to any relief or exemption from tax provided by the Covered Tax Agreement.
Article 6-Purpose of Covered Tax Agreement
Tax Treaties:
Desiring to conclude an Agreement for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income,

Multilateral Instrument:
Intending to eliminate double taxation with respect to
the taxes covered by this agreement without creating
opportunities for non-taxation or reduced taxation
through tax evasion or avoidance (including through
treaty-shopping arrangements aimed at obtaining reliefs
provided in this agreement for the indirect benefit of
residents of third jurisdictions),

38 Tax Treaties will be modified

Article 7-Prevention of Treaty Abuse (PPT)
Mini Principal Purpose Test (Hong Kong, Serbia, UK, India, Mexico, Russia):
The provisions of this Article shall not apply if it was the main purpose
or one of the main purposes of any person concerned with the creation
or assignment of the shares or other rights in respect of which the
dividend is paid to take advantage of this Article by means of that
creation or assignment.

Multilateral Instrument:
Notwithstanding any provisions of a Covered Tax Agreement, a
benefit under the Covered Tax Agreement shall not be granted in
respect of an item of income or capital if it is reasonable to
conclude, having regard to all relevant facts and circumstances,
that obtaining that benefit was one of the principal purposes of
any arrangement or transaction that resulted directly or indirectly
in that benefit, unless it is established that granting that benefit in
these circumstances would be in accordance with the object and
purpose of the relevant provisions of the Covered Tax Agreement.

38 Tax Treaties will be modified

 Article 8-Dividend Transfers
Article 10 Tax Treaty:
However, dividends paid by a company which is a resident of a Contracting State may also
be taxed in that State according to the laws of that State, but if the beneficial owner of
the dividends is a resident of the other Contracting State, the tax so charged shall not
exceed:
5 percent of the gross amount of the dividends if the beneficial owner is a company
(other than a partnership) which holds directly at least 25 percent of the capital of the
company paying the dividends,

Multilateral Instrument: 9 Tax Treaties will be modified

Provisions of a Covered Tax Agreement that exempt dividends paid by a company which is
a resident of a Contracting Jurisdiction from tax or that limit the rate at which such
dividends may be taxed, provided that the beneficial owner or the recipient is a company
which is a resident of the other Contracting Jurisdiction and which owns, holds or controls
more than a certain amount of the capital, shares, stock, voting power, voting rights or
similar ownership interests of the company paying the dividends, shall apply only if the
ownership conditions described in those provisions are met through out a 365 day
period that includes the day of the payment of the dividends (for the purpose of
computing that period, no account shall be taken of changes of ownership that would
directly result from a corporate reorganisation, such as a merger or divisive
reorganisation, of the company that holds the shares or that pays the dividends).
Article 9-Capital Gains form Alienation of Shares
Article 13 Tax Treaty:
Gains derived by a resident of a Contracting State from the alienation of shares
deriving more than 50 percent of their value directly or indirectly from immovable
property situated in the other Contracting State may be taxed in that other State.
Article 11-Right to Tax a Party’s Own Residents

Multilateral Instrument-Saving Clause:

The Agreement shall not affect the taxation by a Contracting State
of its residents, except with respect to the benefits granted under
provisions of (i) correlative adjustment for permanent establishment,
(ii) corresponding adjustment, (iii) government service, (iv) students,
(v) methods for elimination of double taxation, (vi) non-discrimination,
(vii) mutual agreement procedure, or (viii) members of diplomatic
missions and consular posts of the Agreement.
Article 12-Artificial Avoidance of PE Status (1)
Article 13-Artificial Avoidance of PE Status (2)
 Article 14-Splitting Contracts

Connected Concluded with the same person

activities or related persons
Logical consequence of
continuation
Absence of tax planning
considerations
Nature of the works

Same employees
Article 15-Persons Closely-Related to an Enterprise
Multilateral Instrument:
For the purposes of the provisions of a Covered Tax Agreement that is
modified by paragraph 2 of Article 12 (Artificial Avoidance of Permanent
Establishment Status through Commissionnaire Arrangements and
Similar Strategies), paragraph 4 of Article 13 (Artificial Avoidance of
Permanent Establishment Status through the Specific Activity
Exemptions), or paragraph 1 of Article 14 (Splitting-up of Contracts), a
person is closely related to an enterprise if, based on all the relevant
facts and circumstances, one has control of the other or both are under
the control of the same persons or enterprises. In any case, a person
shall be considered to be closely related to an enterprise if one possesses
directly or indirectly more than 50 percent of the beneficial interest in
the other (or, in the case of a company, more than 50 per cent of the
aggregate vote and value of the company’s shares or of the beneficial
equity interest in the company) or if another person possesses directly
or indirectly more than 50 per cent of the beneficial interest (or, in the
case of a company, more than 50 per cent of the aggregate vote and
value of the company’s shares or of the beneficial equity interest in the
company) in the person and the enterprise.
Article 16-Mutual Agreement Procedure
Not
adopted
Article 17-Corresponding Adjustments
Article 9 Tax Treaty and Multilateral Instrument:
Where a Contracting Jurisdiction includes in the profits of an enterprise of
that Contracting Jurisdiction-and taxes accordingly-profits on which an
enterprise of the other Contracting Jurisdiction has been charged to tax in
that other Contracting Jurisdiction and the profits so included are profits
which would have accrued to the enterprise of the first mentioned
Contracting Jurisdiction if the conditions made between the two enterprises
had been those which would have been made between independent
enterprises, then that other Contracting Jurisdiction shall make an
appropriate adjustment to the amount of the tax charged therein on those
profits. In determining such adjustment, due regard shall be had to the other
provisions of the Covered Tax Agreement and the competent authorities of
the Contracting Jurisdictions shall, if necessary, consult each other.
 Implementasi Tax Treaty di Indonesia

Indonesia Treaty partners

Relief-at-source

SKD
PER-25/PJ/2018
if failed
DJP

Refund Request
Application For MAP
PMK-187/03/2015
PER-25/PJ/2018
PMK-49/03/2019 Tax Office
Request PER-25/PJ/2018
For MAP

77
 Application of Tax Treaty

Administratif
+ Substantif

Surat Keterangan Domisili (SKD) Tidak terjadi penyalahgunaan Tax Treaty

Form DGT
transaksi tidak tidak bertindak
semata-mata dan
/atau
sebagai
ditujukan untuk agen/nominee/conduit
pemanfaatan P3B

• manajemen sendiri; dan

Diisi dengan
• pegawai; dan
lengkap, dan
• kegiatan / usaha aktif; dan
benar serta
ditandatangani • terutang pajak di negara
penerima (subject to tax); dan
• Tidak > 50% total
penghasilan untuk
memenuhi kewajiban 78
 Implementasi Tax Treaty di Indonesia

Administrasi Pencegahan Penyalahgunaan Treaty

START

Masuk
Ya
Low-risk Relief-at-source
dalam Safe
transaction (PER-25/PJ/2018)
Harbor?

No

Terpenuhi No Subject to
kriteria Refund method
penyalahgu-
further END
(PMK-187/PMK.03/2015)
naan? verification
Yes
Mutual Agreement
No treaty
Treaty Shopping Procedure / MAP
relief
(PMK 49/03/2019)

79
Form DGT

80
 Implementasi Tax Treaty di Indonesia

• Form DGT
WPDN • Konfirmasi
• CoR • Verifikasi
• Upload
• Tanda terima
WPLN DJP

81
 Tax Refund Method
Kelebihan Pemotongan dan Pemungutan
terkait Penerapan P3B (PMK 187/03/2015)

Disebabkan karena kesalahan

Pengembalian pajak diberikan
penerapan P3B, keterlambatan
melalui penerbitan Surat Perintah
pemenuhan persyaratan
Membayar Kelebihan
administratif untuk menerapkan
Pembayaran Pajak (SPMKP) ke
P3B setelah terjadi pemotongan
rekening bank di Indonesia dalam
atau pemungutan atau
mata uang Rupiah
Persetujuan Bersama

Diajukan oleh Subjek Pajak Luar

Diajukan secara tertulis dalam Negeri yang menerima
bahasa Indonesia dan penghasilan, melalui BUT di
ditandatangani oleh Subjek Pajak indonesia atau Subjek Pajak
Luar Negeri atau pihak yang Pemotong/Pemungut kepada
mengajukan permohonan Kepala Kantor Pelayanan Pajak
terdaftar

82
 Tax Refund Method
Dokumen Bukti pemotongan atau pemungutan pajak
yang
diperlukan Penghitungan pajak yang seharusnya tidak terutang

Alasan permohonan pengembalian atas kelebihan

pembayaran pajak yang seharusnya tidak terutang

Surat permohonan dari Subjek Pajak Luar Negeri

Surat kuasa dari Subjek Pajak Luar Negeri kepada Wajib

Pajak yang melakukan pemotongan atau pemungutan
Surat pernyataan dari Subjek Pajak Luar Negeri bahwa pajak belum
diperhitungkan dengan pajak yang terutang di luar negeri dan/atau
belum dibebankan sebagai biaya dalam penghitungan penghasilan
kena pajak di luar negeri
SKD Subjek Pajak Luar Negeri
Persetujuan Bersama, dalam hal kelebihan pemotongan atau
pemungutan disebabkan adanya Persetujuan Bersama

Dokumen pendukung bagi Subjek Pajak Luar Negeri yang

menerima atau memperoleh penghasilan terkait dengan P3B
83
Tax Refund Method

84
 Implementasi Tax Treaty di Negara Mitra

Bagi Subjek Pajak Dalam Negeri (PER 35/PJ/2010)

Masa berlaku SKD yang diterbitkan
SKD diterbitkan atau disahkan oleh KPP Domisili adalah 1 tahun
oleh Direktur Jenderal Pajak sejak tanggal diterbitkan kecuali
melalui KPP Domisili bagi Wajib Pajak bank sepanjang
berdasarkan permohonan Wajib Pajak bank tersebut
Wajib Pajak mempunyai alamat yang sama
dengan SKD yang telah diterbitkan

KPP Domisili menerbitkan

SKD dapat menggunakan
SKD dalam waktu paling lama
Form-DGT 7 atau formulir
5 hari kerja setelah menerima
khusus yang diterbitkan oleh
permohonan Wajib Pajak
negara mitra P3B
secara lengkap

Wajib Pajak dapat memperoleh Permohonan Wajib Pajak

SKD apabila berstatus subjek diajukan secara tertulis
pajak dalam negeri Indonesia,
kepada Direktur Jenderal
memiliki NPWP dan tidak
berstatus sebagai subjek pajak Pajak melalui KPP Domisili
luar negeri termasuk Bentuk dengan menggunakan Form-
Usaha Tetap DGT 6
85
Implementasi Tax Treaty di Negara Mitra

86
Implementasi Tax Treaty di Negara Mitra

87
11 November 2020
89
90
Case Study 1 – Immovable Property
Tenant

Japan

Indonesia

Questions:
1. Apakah treaty apply?
2. Hak pemajakan negara
Owner mana?

Apartemen
 Case Study 2 – Immovable Property
Owner
Apartemen

Japan

Indonesia

Rent Indonesia:
1. PPh Pot/put ?
2. Apakah treaty apply?

Tenant
Case Study 3 – Immovable Property
Owner

Japan

Indonesia

Rent Indonesia:
1. Hak pemajakan Indonesia?

2. UU PPh Pasal ?

Tenant
Apartemen
 Case Study 4 – Residency
Keterangan Indonesia Singapore
Unit usaha PT Luragung Empal Gentong
Jaya Pte.Ltd.
Aktivitas politik Anggota DPRD ---
Kuningan
Keluarga 1 istri dan 1 anak 1 istri dan 4 anak
Tempat tinggal Apartemen Rumah (hak
(sewa) milik)
Kebiasaan Sesekali Sering
tinggal

Kang Ujang Sobari, resident negara mana..??

 Case Study 5 – Capital Gain
Owner

Indonesia

Hong Kong

Questions:
1. Apakah treaty apply?
Sale of shares 2. Hak pemajakan negara
mana?

Nippon Koei Corp. Buyer

Asset 80% Apartment
 Case Study 6 – Shipping Profit

300.000

Singapore

1.000.000 Indonesia

750.000

Questions:
1. Hak pemajakan negara mana?
2. Berapa pajak yang terutang?
 Case Study 7 – Aircraft Profit

500.000
Indonesia

750.000 Japan

1.000.000

Questions:
1. Hak pemajakan negara mana?
2. Berapa pajak yang terutang?
 Case Study 8 – Employment Income

10.000
contract

Singapore
Build Asia Pte. Ltd.

Invoice 60 days Indonesia

10.000

BUT Build Asia Pte. Ltd.

Questions: 1. Hak pemajakan negara mana?

2. Berapa pajak yang terutang? 98
 Case Study 9 – Artist Performance

Intersope Records Inc.

Contract

95% of net receipts Japan

Indonesia

Indonesia:
1. Penghasilan AKB 48?
2. Penghasilan Interscope Inc. ?

Promotor
AKB 48 Concert
 Case Study 10 – Director Fees
PT MERAPI STEEL
1. Honor $1.000/ meeting of BoD
2. Sebagai anggota BoD
menerima 0,01% dari laba bersih
PT MS
3. Sebagai pegawai biasa dan
1 konsultan tetap, Murase san menerima
$2000/bulan. Untuk keperluan ini,
Murase san berada di Indonesia 4 INDONESIA
bulan.

2 JAPAN

Penghasilan mana saja yang dapat

3 dikenakan pajak di Indonesia berdasarkan
P3B Indonesia - Jepang?

Murase san
 Case Study 11 – Permanent Establishment
Reuters Inc.

United Kingdom

Indonesia

Information

Questions: 1. Bentuk Usaha Tetap?

2. Hak pemajakan negara mana? 101
Case Study 12
PE’s Taxable Income-BUT Nihon Corp.
In January 2010, Nihon Corp., a major Japanese car
manufacturer, agreed to sign a 10-years contract manufacturing
with PT Astra International, an Indonesian car manufacturer,
which is 15% owned by Nihon Corp. For this reason, Nihon Corp.
established a permanent establishment (BUT Nihon Corp.) to
support PT Astra’s daily operation. In 2020, BUT Nihon Corp.
received US$ 1.000.000 from PT Astra for its technical services.
Nihon Corp., also received US$ 500.000 from PT Astra as
dividend and US$ 750.000 from PT KIA Indonesia Motors for the
same technical services which is paid directly to the Company’s
bank account at Japan Bank. Assume that you are Indonesian Tax
Officer, calculate how much Income of BUT Nihon Corp. should
be subject to corporate income tax in Indonesia?
102
“ The great aims of education is action not knowledge”
Herbert Spencer

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