CONSOLIDATED TRANSCRIPT OF
INDONESIA - NETHERLANDS TAX TREATY

AGREEMENT BETWEEN
THE KINGDOM OF THE NETHERLANDS
AND
THE REPUBLIC OF INDONESIA
FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

AS AMENDED BY PROTOCOL 1991 AND 1993
(COME INTO FORCE AS OF 2 MAY 1994)

CHAPTER 1
SCOPE OF THE AGREEMENT

Article 1
PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or both of the two States.

Article 2
TAXES COVERED

  1. This Agreement shall apply to taxes on income imposed on behalf of each of the two States or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

  2. There shall be regarded as taxes on income all taxes imposed on total income, or elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. 

  3. The existing taxes to which the Agreement shall apply are, in particular:

    (a)

    in the case of the Netherlands:

    -

    de inkomstenbelasting (income tax),

    -

    de loonbelasting (wages tax),

    -

    de vennootschapsbelasting (company tax) including the Government share in the net profits of the exploitation of natural resources levied pursuant to the Mining Act of 1810 (Minjnwet 1810) with respect to concessions issued from 1967, or pursuant to the Netherlands Continental Shelf Mining Act of 1965 (Mijnwet Continental Plat 1965),

    -

    de dividendbelasting (dividend tax),

    (hereinafter referred to as "Netherlands tax");
    (b)

    in the case of Indonesia:

    -

    pajak penghasilan imposed under the Undang-undang Pajak Penghasilan 1984 and to the extent provided in Article 33 paragraphs (2)a and (3) of that law, pajak perseroan (company tax) imposed under the Ordonansi Pajak Perseroan 1925 and pajak atas bunga, dividen dan royalty, imposed under the Undang-undang Pajak atas Bunga, Dividen dan Royalty 1970 insofar as the afore-mentioned Article 33, paragraphs (2)a and (3), was effective at the date of its stipulation

    (hereinafter referred to as "Indonesian tax");

  4. The Agreement shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes. The competent authorities of the two States shall notify to each other any substantial changes which have been made in their respective taxation laws.

CHAPTER II
DEFINITIONS

Article 3
GENERAL DEFINITIONS

  1. In this Agreement, unless the context otherwise requires:

    (a)

    the terms "one of the two States" and "the other State" mean the Netherlands or Indonesia, as the context requires; the term "the two States" means the Netherlands and Indonesia; 

    (b)

    the term "the Netherlands" comprises the part of the Kingdom of the Netherlands that is situated in Europe and the part of the seabed and its sub-soil under the North Sea, over which the Kingdom of the Netherlands has sovereign rights in accordance with international law;

    (c)

    the term "Indonesia" means the land areas, the archipelagic waters and the territorial waters of the Republic of Indonesia as defined in its laws and in accordance with international law as well as the adjacent areas to the extent that the Republic of Indonesia has sovereign rights and jurisdiction in accordance with the provisions of the United Nations Convention on the Law of the Sea, 1982;

    (d)

    the term "person" comprises an individual, a company and any other body of persons;

    (e)

    the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;

    (f)

    the terms "enterprise" of one of the two States" and "enterprise of the other State" mean respectively an enterprise carried on by a resident of one of the two States and an enterprise carried on by a resident of the other State;

    (g)

    the term "international traffic" means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in one of the two States, except when the ship or aircraft is operated solely between places in the other State;

    (h)

    the term "nationals" means:

    (1)

    all individuals possessing the nationality of one of the two States; 

    (2)

    all legal persons, partnerships and associations deriving their status as such from the laws in force in one of the two States;

    (i)

    the term "competent authority" means:

    (1)

    in the Netherlands, the Minister of Finance or his duly authorized representative;

    (2)

    in Indonesia, the Minister of Finance or his duly authorized representative.

  2. As regards the application of the Agreement by either of the two States any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of the State relating to the taxes which are the subject of this Agreement.

Article 4
FISCAL DOMICILE

  1. For the purposes of this Agreement, the term "resident of one of the two States" means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 

  2. For the purposes of this Agreement an individual, who is a member of a diplomatic or consular mission of one of the two States in the other State or in a third State and who is a national of the sending State, shall be deemed to be a resident of the sending State if he is submitted therein to the same obligations in respect of taxes on income as are resident of that State.

  3. Where by reason of the provisions of paragraph 1 an individual is a resident of both States, then this case shall be determined in accordance with the following rules:

    (a)

    he shall be deemed to be a resident of the State in which he has a permanent home available to him. If he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closest (centre of vital interests);

    (b)

    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

    (c)

    if he has an habitual abode in both States or in neither of them, the competent authorities of the two States shall settle the question by mutual agreement.

  4. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. If the competent authorities of the two States consider that a place of effective management is present in both States, they shall settle the question by mutual agreement. 

Article 5
PERMANENT ESTABLISHMENT

  1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business in which the business of the enterprise is wholly or partly carried on. 

  2. The term "permanent establishment" shall include especially:

    (a) a place management;
    (b) a branch;
    (c) an office;
    (d) a factory;
    (e) a workshop;
    (f) a farm of plantation;
    (g)

    a mine, an oil well, quarry or other place of extraction of natural resources.

  3. The term "permanent establishment" likewise encompasses:

    (a)

    a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six months;

    (b)

    the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than three months within any 12-month period.

  4. The term "permanent establishment" shall not be deemed to include:

    (a)

    the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

    (b)

    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

    (c)

    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

    (d)

    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

    (e)

    the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

  5. A person acting in one of the two States on behalf of an enterprise of the other State -- other than an agent of an independent status to whom paragraph 7 applies -- shall be deemed to be a permanent establishment in the first-mentioned State if:

    (a)

    he has, and habitually exercises in the first-mentioned State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or

    (b)

    he maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders on behalf of the enterprise.

  6. An insurance enterprise of one of the two States shall, except with regard to reinsurance, be deemed to have a permanent establishment in the other State if it collects premiums in the territory of that other State or insures risks situated therein through an employee or through a representative who is not an agent of an independent status within the meaning of paragraph 7. 

  7. An enterprise of one of the two States shall not be deemed to have a permanent establishment in the other State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, when such a broker or agent carries on activities wholly or almost wholly for that enterprise itself or for that enterprise and other enterprises which are controlled by or have a controlling interest in it, he shall not be considered an agent of an independent status within the meaning of this paragraph.

  8. The fact that a company which is a resident of one of the two States controls or is controlled by a company which is a resident of the other State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

CHAPTER III
TAXATION OF INCOME

Article 6
INCOME FROM IMMOVABLE PROPERTY

  1. Income from immovable property may be taxed in the State in which such property is situated.

  2. The term "immovable property" shall be defined in accordance with the law of the State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property. 

  3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

  4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services.

Article 7
BUSINESS PROFITS

  1. The profits of an enterprise of one of the two States shall be taxable only in that State unless the enterprise carries on business in the other State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment or are derived within such other State from sales of goods or merchandise of the same kind as those sold, or from other business transactions of the same kind as those effected, through the permanent establishment.

  2. Where an enterprise of one of the two States carries on business in the other State through a permanent establishment situated therein, there shall in each State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

  3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

  4. Insofar as it has been customary in one of the two States to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article. 

  5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

  6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

  7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. 

Article 7A
SHIPPING AND AIRCRAFT

  1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the State in which the place of effective management of the enterprise is situated. 

  2. If the place of effective management of a shipping enterprise is aboard a ship then it shall be deemed to be situated in the State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the State of which the operator of the ship is a resident. 

  3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency but only so much of them as is attributable to the participating enterprise in proportion to its share in such joint operation. 

Article 8
ASSOCIATED ENTERPRISES

  1. Where:
    (a)

    an enterprise of one of the two States participates directly or indirectly in the management, control or capital of an enterprise of the other State, or

    (b)

    the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the two States and an enterprise of the other 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.
  2. Where one of the two States includes in the profits of an enterprise of that State -- and taxes accordingly -- profits on which an enterprise of the other State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged in that State on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the two States shall, if necessary, consult each other.

Article 9
DIVIDENDS

  1. Dividends paid by a company which is a resident of one of the two States to a resident of the other State may be taxed in that other State.

  2. However, such dividends may also be taxed in the State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other State, the tax so charged shall not exceed: 

    (a)

    10% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividends;

    (b)

    15% of the gross amount of the dividends in all other cases.

  3. The competent authorities of the two States shall by mutual agreement settle the mode of application of paragraph 2. 

  4. The provisions of paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 

  5. The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, founders' shares or other rights participating in profits, as well as income from debt-claims participating in profits and income from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident. 

  6. The provisions of paragraph 1 and 2 shall not apply if the recipient of the dividends being a resident of one of the two States, has in the other State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case, the provisions of Article 7 shall apply.

  7. Where a company which is a resident of one of the two States derives profits or income from the other State, the other State may not impose any tax on the dividends paid by the company to persons who are not residents of that other State, or subject to the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. 

ARTICLE 10
INTEREST

  1. Interest arising in one of the two States and paid to a resident of the other State may be taxed in that other State. 

  2. However, such interest may also be taxed in the State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10% of the gross amount of the interest.

  3. Notwithstanding the provisions of paragraph 2, interest arising in one of the two States shall be taxable only in the other State to the extent that such interest is derived by:

    (i)

    the Government of the other State, including political subdivisions and local authorities thereof; or

    (ii)

    the Central Bank of the other State; or

    (iii)

    a financial institution owned or controlled by the Government of the other State, including political subdivisions and local authorities thereof; or

    (iv)

    any resident of the other State with respect to debt-claims guaranteed or insured by the Government of the other State including political subdivisions and local authorities thereof, the Central Bank of the other State or any financial institution owned or control led by that Government.

  4. The competent authorities of the two States shall by mutual agreement settle the mode of application of paragraphs 2 and 3. 

  5. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and, in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. However, the term "interest" does not include income dealt with in Article 9.

  6. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a resident of one of the two States, has in the other State in which the royalties arise a permanent establishment with which the debt-claim from which the interest arises is effectively connected. In such a case, the provisions of Article 7 shall apply. 

  7. Interest shall be deemed to arise in one of the two States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of one of the two States or not, has in one of the two States a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

  8. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each State, due regard being had to the other provisions of this Agreement. 

Article 11
ROYALTIES

  1. Royalties arising in one of the two States and paid to a resident of the other State may be taxed in that other State.

  2. However, such royalties may also be taxed in the State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed 10% of the gross amount of the royalties. 

  3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work -- including cinematograph films and films or tapes used for radio or television broadcasting -- any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. However, the term does not include payments for the furnishing of technical services.

  4. The competent authorities of the two States shall by mutual agreement settle the mode of application of paragraph 2. 

  5. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a resident of one of the two States, has in the other State in which the royalties arise a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such case, the provisions of Article 7 shall apply. 

  6. Royalties shall be deemed to arise in one of the two States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of one of the two States or not, has in one of the two States a permanent establishment in connection with which the contract under which the royalties are paid was concluded, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

  7. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each State, due regard being had to the other provisions of this Agreement.

Article 12
LIMITATION OF ARTICLES 9, 10 AND 11

International organisations, organs and officials thereof and members of a diplomatic or consular mission of a third State, being present in one of the two States, shall not be entitled, in the other State, to the reductions from tax provided for in Articles 9, 10 and 11 in respect of the items of income dealt with in these Articles and arising in that other State, if such items of income are not subject to a tax on income in the first-mentioned State.

Article 13
CAPITAL GAINS

  1. Gains from the alienation of immovable property, as defined in Article 6, paragraph 2, may be taxed in the State in which such property is situated.

  2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of one of the two States has in the other State or of movable property pertaining to a fixed base available to a resident of one of the two States in the other State for the purpose of performing professional services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in the other State.

  3. Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships and aircraft shall be taxable only in the State in which the place of effective management of the enterprise is situated. For the purposes of this paragraph the provisions of Article 7A, paragraph 2, shall apply.

  4. Gains from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3 shall be taxable only in the State of which the alienator is a resident. 

  5. The provisions of paragraph 4 shall not affect the right of each of the two States to levy according to its own law a tax on gains from the alienation of shares or "jouissance" rights in a company, the capital of which is wholly or partly divided into shares and which under the laws of that State is a resident of that State, derived by an individual who is a resident of the other State and has been a resident of the first-mentioned State in the course of the last five years preceding the alienation of the shares or "jouissance" rights.

Article 14
INDEPENDENT PERSONAL SERVICES

  1. Income derived by a resident of one of the two States in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other State for the purpose of performing his activities or he is present in that other State for a period or periods exceeding in the aggregate 91 days in any 12-month period. If he has such a fixed base or 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 attributable to that fixed base or is derived in that other State during the aforesaid period or periods.

  2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, dentists and accountants.

Article 15
DEPENDENT PERSONAL SERVICES

  1. Subject to the provisions of Article 16, 18, 19, 20 and 21 salaries, wages and other similar remuneration derived by a resident of one of the two States in respect of an employment shall be taxable only in that State unless the employment is exercised in the other State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

  2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of one of the two States in respect of an employment exercised in the other State shall be taxable only in the first-mentioned State, if:

    (a)

    the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days within a period of twelve months; and

    (b)

    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

    (c)

    the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

  3. Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of one of the two States in respect of an employment exercised aboard a ship or aircraft in international traffic shall be taxable only in that State. 

Article 16
DIRECTORS' FEES

  1. Remuneration and other payments derived by a resident of the Netherlands in his capacity as a "pengurus" or a "komisaris" of a company which is a resident of Indonesia may be taxed in Indonesia. 

  2. Remuneration and other payments derived by a resident of Indonesia in his capacity as a "bestuurder" or a "commissaris" of a company which is a resident of the Netherlands may be taxed in the Netherlands. 

Article 17
ARTISTES AND ATHLETES

Notwithstanding the provisions of Articles 5, 7, 14 and 15, income derived by public entertainers, such as theatre, motion picture, radio or television artists, and musicians, and by athletes, from their personal activities as such, or income derived from the furnishing by an enterprise of the services of such public entertainers or athletes, may be taxed in the State in which these activities or services are exercised.

Article 18
PENSIONS

Subject to the provisions of Article 19, paragraph 1:
(a)

pensions and other similar remuneration, which are paid by an enterprise of one of the two States to a resident of the other State in consideration of an employment formerly exercised in the service of that enterprise, and which are chargeable as such against the profits arising in the first-mentioned State, may be taxed in the first-mentioned State;

(b)

all other pensions and other similar remuneration paid to a resident of one of the two States in consideration of past employment shall be taxable only in that State.

Article 19
GOVERNMENTAL FUNCITONS

  1. Remuneration, including pensions, paid by, or out of funds created by, one of the two States or a political subdivision or a local authority thereof to any individual in respect of services rendered to that State or subdivision or local authority thereof in the discharge of functions of a governmental nature may be taxed in that State.

  2. Notwithstanding paragraph 1, the provisions of Articles 15, 16 or 18 shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by one of the two States or a political subdivision or a local authority thereof. 

  3. Paragraph 1 shall not apply in so far as services are rendered to a State in the other State by an individual who is a resident and a national of that other State.

Article 20
PROFESSORS AND TEACHERS

An individual who sojourns in one of the two States for a period not exceeding two years, for the purpose of teaching at a university, college, school or other educational institution or at a non-commercial and non-industrial research institute in that State and who immediately prior to such sojourn is a resident of the other State, shall not be taxed in the first-mentioned State in respect of any payments which he receives for activity.

Article 21
STUDENTS

  1. An individual who immediately before visiting one of the two States is a resident of the other State and is temporarily present in the first-mentioned State for the primary purpose of:

    (a) studying at a recognised university, college or school in that first-mentioned State; or
    (b) securing training as a business apprentice, shall be exempt from tax in the first-mentioned State in respect of:
    (i) all remittances from abroad for the purpose of his maintenance, education or training; and

    (ii)

    any remuneration for personal services performed in the first-mentioned State in an amount that, as far as the Netherlands is concerned, does not exceed 3,600 guilders, and, as far as Indonesia is concerned, does not exceed an amount to be determined by the competent authorities by mutual agreement, for any taxable year.

    The benefits under this paragraph shall only extend for such period of time as may be reasonable or customarily required to effectuate the purpose of the visit.

  2. An individual who immediately before visiting one of the two States is a resident of the other State and is temporarily present in the first-mentioned State for a period not exceeding three years for the purpose of study, research or training solely as a recipient of a grant, allowance or award from a scientific, educational, religious or charitable organization or under a technical assistance programme entered into by one of the two States, a political subdivision or a local authority thereof shall be exempted from tax in the first-mentioned State on:

    (a)

    the amount of such grant, allowance or award; and

    (b)

    any remuneration for personal services performed in the first-mentioned State provided such services are in connection with his study, research or training or are incidental thereto, in an amount that, as far as the Netherlands is concerned, does not exceed 3,600 guilders, and as far as Indonesia is concerned does not exceed an amount to be determined by the competent authorities by mutual agreement, for any taxable year.

  3. An individual who immediately before visiting one of the two States is a resident of the other State and is temporarily present in the first-mentioned State for a period not exceeding twelve months as an employee of, or under contract with the last-mentioned State, a political subdivision or a local authority thereof, or an enterprise of the last-mentioned State, for the purpose of acquiring technical, professional or business experience, shall be exempted from tax in the first-mentioned State on: 

    (a)

    all remittances from the last-mentioned State for the purpose of his main (Protocol' 91)
    tenance, education or training; and

    (b)

    any remuneration for personal services performed in the first-mentioned State, provided such services are in connection with his study or training or are incidental thereto, in an amount that, as far as the Netherlands is concerned does not exceed 15,000 guilders, and, as far as Indonesia is concerned, does not exceed an amount to be determined by the competent authorities by mutual agreement.

    However, the benefits under this paragraph shall not be granted if the technical, professional or business experience is acquired from a company 50% or more of the voting stock of which is owned by the State, the political subdivision or the local authority thereof or the enterprise, having sent the employee or the person working under contract.

CHAPTER IV

Article 22
ELIMINATION OF DOUBLE TAXATION

  1. Each of the two States, when imposing tax on its residents, may include in the basis upon which such taxes are imposed, the items of income, which according to the provisions of this Agreement may be taxed in the other State. 

  2. However, where a resident of the Netherlands derives items of income which according to Article 6, Article 7, Article 9, paragraph 6, Article 10, paragraph 6, Article 11, paragraph 5, Article 13, paragraphs 1 and 2, Article 14, Article 15, paragraph 1, Article 16, paragraph 2, and Article 19, paragraph 1, of this Agreement may be taxed in Indonesia and are included in the basis referred to in paragraph 1, the Netherlands shall exempt such items of income by allowing a reduction of its tax. This reduction shall be computed in conformity with the provisions of the Netherlands law for the avoidance of double taxation. For that purpose the said items of income shall be deemed to be included in the total amount of the items of income which are exempt from the Netherlands tax under those provisions. 

  3. Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for the items of income which according to Article 9, paragraph 2, Article 10, paragraph 2, Article 11, paragraph 2, Article 17 and Article 18, subparagraph (a), of this Agreement may be taxed in Indonesia to the extent that these items are included in the basis referred to in paragraph 1. The amount of this deduction shall be equal to the tax paid in Indonesia on these items of income, but shall not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items of income which are exempt from the Netherlands tax under the provisions of the Netherlands law for the avoidance of double taxation.

  4. Where a resident of Indonesia derives items of income which may be taxed in the Netherlands in accordance with the provisions of this Agreement and are included in the basis referred to in paragraph 1, the amount of the Netherlands tax payable in respect of the income shall be allowed as a credit against the Indonesian tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Indonesian tax which is appropriate to such income. For the purposes of this paragraph in determining the amount of the Netherlands tax investment premiums and bonuses and disinvestment payments as meant in the Netherlands Investment Account Law ("Wet Investeringsrekening") shall not be taken into account. 

  5. Where a resident of one of the two States derives gains which may be taxed in the other State according to Article 13, paragraph 5, that other State shall allow a deduction from its tax on such gains to an amount equal to the tax levied in the first-mentioned State on the said gains. 

Article 23
NON-DISCRIMINATION

  1. Nationals of one of the two States shall not be subjected in the other State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the two States. 

  2. The taxation on a permanent establishment which an enterprise of one of the two States has in the other State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging one of the two States to grant to residents of the other State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

  3. Except where the provisions of paragraph 1 of Article 8, paragraph 8 of Article 10, or paragraph 7 of Article 11, apply, interest, royalties and other disbursements paid by an enterprise of one of the two States to a resident of the other State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

  4. Enterprises of one of the two States, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

  5. The term "taxation" as used in this Article means taxes of every kind and description, except for the Indonesian municipal tax on foreign nationals (pajak bangsa asing).

CHAPTER V
SPECIAL PROVISIONS

Article 24
MUTUAL AGREEMENT PROCEDURE

  1. Where a person considers that the actions of one or both of the two 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 law of those States, present his case to the competent authority of the State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the 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 the Agreement.

  2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other State, with a view to the avoidance of taxation not in accordance with this Agreement.

  3. The competent authorities of the two States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

  4. The competent authorities of the two States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 25
EXCHANGE OF INFORMATION

  1. The competent authorities of the two States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the two States concerning taxes covered by the Agreement in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Article 1. Any information received by one of the two States shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

  2. In no case shall the provisions of paragraph 1 be construed so as to impose on one of the two States the obligation: 

    (a)

    to carry out administrative measures at variance with the laws or administrative practice of that or of the other State;

    (b)

    to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other State;

    (c)

    to supply information which would disclose any trade, business, industrial, commercial, or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

Article 26
DIPLOMATIC AND CONSULAR OFFICIALS

Nothing in the Agreement shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements.

Article 27
TERRITORIAL EXTENSION

  1. This Agreement may be extended, either in its entirety or with any necessary modifications, to either or both of the countries Aruba or the Netherlands Antilles, if the country concerned imposes taxes substantially similar in character to those to which this Agreement applies. Any such extension shall take effect from such date and subject to such modifications and conditions, including conditions as to termination, as may be specified and agreed in notes to be exchanged through diplom