Page 6 - Newsletter (Realization of 2019 State Budget & Indonesia’s Position in MLI)

DDTC Newsletter Vol.03 | No.01 I January 2020 Page 6 of 7

Realization of 2019 State Budget & Indonesia's
Position in MLI

Table 6 – Indonesia’s Position in MLI
MLI Provisions Indonesia’s Position

Article 3: Transparent Entities Reservation (does not fully adopt).
Article 4: Dual Resident Entities Adoption, but for Indonesia’s tax treaties with Turkey, the United States, Armenia, and
Mexico, the government makes reservations.
Article 5: Elimination of Double Taxation Reservation (does not fully adopt).

Article 6: Purpose of a Covered Tax Adoption and provides notification to the 47 jurisdictions included in the convention.
Agreement
Article 7: Prevention of Treaty Abuse Adoption of principal purpose test (PPT). The government also provides notification to
Hong Kong, India, Laos, United Kingdom, Mexico, Russia, and Serbia.

Article 8: Dividend Transfer Transactions Adoption and provides notification to Canada, France, Japan, the Netherlands, Belgium,
Poland, South Africa, Armenia, Romania, and Spain.
Article 9: Capital Gains from Alienation of Adoption of Article 9(4). The government provides notification to Australia, Canada, the
Shares or Interests of Entities People's Republic of China, France, Hong Kong, India, Laos, Malaysia, the Philippines,
Deriving their Value Principally Vietnam, Croatia, Finland, Egypt, Mexico, and Serbia.
from Immovable Property
Article 10: Anti-abuse Rule for Permanent Reservation (does not fully adopt).
Establishments (PE) Situated in
Third Jurisdictions
Article 11: Application of Tax Agreements Adoption and provides notification to Luxembourg, United Kingdom, Italy, Bulgaria, Czech
to Restrict a Part5r's Right to Republic, Egypt, Romania, and Sweden.
Tax its Own Residents (Saving
Clause)
Article 12: Artificial Avoidance of Permanent Adoption and provides notification to the 47 jurisdictions included in the convention.
Establishment Status through
Commissionaire Arrangements
and Similar Strategies
Article 13: Artificial Avoidance of PE Status Adoption of Option A and provides notification to the 47 jurisdictions included in the
through the Specific Activity convention.
Exemptions
Article 14: Avoidance of PE Status through Adoption and provides notification for New Zealand, the Netherlands, and Norway.
Splitting-up of Contracts

Article 15: Definition of a Person Closely Does not state the position.
Related to an Enterprise
Article 16: Mutual Agreement Procedure Reservation by modifying the first sentence of Article 16(1) based on the current Covered
(MAP) Tax Agreement conditions. Indonesia also provides notifications for 47 other contracting
jurisdictions.
Article 17: Corresponding Adjustments Adoption, but makes reservation for Australia, Brunei Darussalam, the People’s Republic
of China, Hong Kong, India, Laos, Luxembourg, Netherlands, Seychelles, South Korea,
United Kingdom, United Arab Emirates, United States, Vietnam, Croatia, Finland, Poland,
Qatar, Slovakia, South Africa, Turkey, Armenia, Bulgaria, Denmark, Egypt, Mexico, Pakistan,
Portugal, Serbia, and Sweden.
Article 18-26: Arbitration Does not state the position.
Article 27-34: Final Provisions Does not state the position.
Article 35: Entry into Effect For substantive provisions, the modification of entry into effect is reservation with
reference to Article 28, Article 29, and Article 36.
For optional provisions based on the types of taxes listed in Article 35(1)b and 35(5)b, the
phrase entry into effect is taxable periods beginning on or after 1 January of the next year
beginning on or after the expiration of a period”.
Source: OECD and Presidential Reg. No. 77/2019.