Taxation WINS - Prospectus 2010

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XIII. Taxation

Income tax on shares dividend received or acquired by Shareholders is calculated and treated in accordance with the prevailing Taxation Regulations. The following constitutes a summary on the primary consequence from taxation’s point of view in Indonesia due to ownership and sale of shares in limited liability companies established in Indonesia. Income Tax on shares dividend shall be applied in accordance with the prevailing statutory regulations. Based on Law of Republic of Indonesia No. 7 of 1983 concerning Income Tax as last amended by Law No. 36 of 2008 effective starting 1 January 2009, hereinafter to be referred to as “UU PPh”. UU PPh article 4 paragraph 1 stated that Tax Object is income, which is every additional economic capability received or acquired by Taxpayer, whether from Indonesia or abroad, which can be used for consumption or to increase the wealth of the concerned Taxpayer, in whatever names or forms, including, among others, dividend. Furthermore, UU PPh article 4 paragraph 3 letter f stated that dividend or portion of profit received or acquired by a limited Liabilities as a domestic Taxpayer, cooperative, state owned entity or regional owned entity, from the capital investment in a business entity established and domiciled in Indonesia is not considered as Object of Income Tax, as long as the following requirements are met: 1. Dividend is from the reserve of retained earning; and 2. For limited Liabilities, state owned entity and regional owned entity receiving dividend, ownership of shares in the entity distributing the dividend is minimum 25 twenty five percent of the paid up capital According to the explanation of this article 4 paragraph 3, therefore dividend, funds of which originate from earning after tax and received or acquired by a limited Liabilities as domestic Taxpayer, and state owned entity or regional owned entity, from its investment in other business entities established and domiciled in Indonesia, with investment amounting to at least 25 twenty five percent, is not included as tax objects. “State owned entity” and “Regional owned entity” referred to in this paragraph shall mean, among others, companies, government banks, and regional development banks. Further in the abovementioned explanation of article 4 paragraph 3 letter f, it is also confirmed that in the event recipient of dividend or portion of profit is a Taxpayer other than the abovementioned entities, such as private person, whether domestic or foreign, firms, CV, foundations and similar organizations, and etc, therefore income in the form of such dividend or portion of profit shall still be considered as tax object. Based on UU PPh article 17 paragraph 2c, it is stated that the tariff applied on income in the form of dividend distributed to Taxpayer that is domestic private person is a maximum of 10 ten percent and final. Article 23 paragraph 1 UU PPh stated that on the dividend paid, made available to be paid, or which payment by government entities has matured, domestic entity tax subject, party performing activities, permanent business establishment, shall be imposed with tax amounting to 15 fifteen percent of the total gross by the party required to make the payment. In the event the Taxpayer, in receiving or acquiring income as stated in Article 23 paragraph 1a does not have Taxpayer Identification Number, tariff of which is 100 one hundred percent higher than the tax tariff that should have been applied. Tax withholding as stated in article 23 paragraph 1, among others, shall not be implemented on dividend distributed to Taxpay- ers as stated in Article 4 paragraph 3 letter f and dividend received by a private person, as stated in Article 17 paragraph 2c. In accordance with the Decree of Minister of Finance of Republic of Indonesia No. 651KMK.041994 dated 29 December 1994 concerning “Certain Sectors of Capital Investment Providing Income to Pension Funds Approved by the Minister of Finance of Republic of Indonesia Are Not Considered as Objects of Income Tax”, therefore the income received or acquired by Pension Funds, establishment of which has been ratified by the Minister of Finance of Republic of Indonesia, in the form of dividend or shares in Limited Liabilities listed at the Stock Exchange in Indonesia, are not considered as Objects of Income Tax. Dividend paid to Foreign Taxpayers shall be imposed with tariff amounting to 20 twenty percent of the gross total or lower tariff in the event that the payment is done to those constitute citizens of a country signing an agreement to avoid double taxation with Indonesia by meeting the Circular Letter of Dir.Gen. of Taxation No. SE-03PJ.1011996 dated 29 March 1996 concerning Application of Agreement to Avoid Double Taxation P3B. Application of such tax tariff shall be done by the party obligated to pay such dividend. Tax withholding as stated is final. 137 137 Regulation of Government of Republic of Indonesia No.41 of 1994 concerning Income Tax on Income from Shares Sale Transaction at the Stock Exchange, juncto Regulation of Government of Republic of Indonesia No.14 of 1997 concerning Amendment of Government Regulation No. 41 of 1994 Concerning Income Tax on Income from Shares Sale Transaction at the Stock Exchange and Circular Letter of Directorate General of Taxation No.SE-07PJ.421995 dated 21 February 1995, concerning application of Income Tax on Income from Shares Sale Transaction at the Stock Exchange PPh Umum No.3 juncto SE-06PJ.41997 dated 20 June 1997 concerning: Implementation of collection of Income Tax on Income from Shares Sale Transaction at the Stock Exchange, has been determined as follows: 1. On income received or acquired by a private person and an entity from Shares Sale Transaction at the Stock Exchange, income tax amounting to 0.10 of total gross of transaction value shall be applied and final. Payment shall be done by way of withholding by organizer of Stock Exchange through securities brokers at the time of full payment of shares sale transaction; 2. Founder shareholders shall be applied with additional income tax amounting to 0.50 of the total value of all shares of Founder owner at the time of Initial Public Offering. The value of such shares is value of shares at the time of Initial Public Offering. Additional deposit of income tax shall be made by a company on behalf of shareholders of Founder prior to the sale of shares of Founder, at the latest 1 one month after such shares are traded at the Stock Exchange. “Founder” shall mean a private person or an entity, whose name is listed in the Registry of Shareholders of a Limited Liability Company or stated in the articles of association of the Limited Liability Company before the Registration Statement submitted to BAPEPAM-LK in the event of Initial Public Offering becomes effective. 3. However, should the party holding the Founder’s shares does not have provisions as contained in the above point 2, therefore income in the form of capital gain from transaction of sale of Founder’s shares shall be applied with income tax pur- suant to general tariff in Article 17 UU PPh. Therefore, the owners of Founder’s shares are obligated to report his choice to the Directorate General of Taxation and organizer of Stock Exchange. BUYER CANDIDATES OF SHARES IN THIS PUBLIC OFFERING ARE EXPECTED TO CONSULT WITH THEIR RESPECTIVE TAX CONSULTANTS CONCERNING THE EFFECTS OF TAXATION ARISING FROM THE PURCHASE, OWNERSHIP, OR SALE OF SHARES PURCHASED FROM THIS PUBLIC OFFERING. 138 138

XIV. Underwriting for Issuance of Shares