taxation in indonesia external liquidity Sources

157 PT Telkom Indonesia Persero Tbk purposes, or investors who have their functional currency other than the U.S.Dollars, all of which may be subject to very diferent tax rules other than the summary below. Moreover, this summary does not address considerations relating to property tax and grants from the U.S.A federal sic states, locals, or non-U.S.A tax considerations. Each shareholder is advised to have consultation with their tax advisors concerning the U.S.A federal, states, locals and non-U.S.A incomes, and other tax considerations of their investment in ADSs or common stocks. For the purpose of this summary, “U.S.A shareholder” is a beneicial owner of ADSs or common stocks in which, for the U.S.A federal income tax purposes, i an individual who is a citizen or resident of the U.S.A, ii a company, or other entities treated as a company for federal income tax purposes, corporated in, established under the laws of the U.S.A or the state or the District of Columbia, iii any entity established or organized in or under the laws of another jurisdiction if it is treated as a domestic company in accordance with the tax laws, iv income from property that is included in gross revenues for federal income taxation purposes regardless of its sources, or v the trust A which the implementation is the subject of major supervision of U.S. courts and owned by one or more American citizen who have the authority to control all substantial decisions or B that has otherwise elected to be treated as U.S.A citizens according to the tax laws. If a partnership or other entities which treated as a “transparent tax” entity for the U.S.A tax purposes is the holder of ADSs or common stocks, therefore, tax treatment of a partner in a partnership or the stackholder in “transparent tax” entity generally depends on the status of the partners or shareholders and the activities of the partnership or “transparent tax “ entities. For federal income tax purposes, the U.S.A citizens who own ADSs will be treated as the owner who receives the beneits of Common Stocks which represented by ADSs.

1. threshold Classiication of passive foreign investment Company “piap”

A non-U.S.A company, such as Telkom, will be treated as a PIAP for the U.S.A Federal income tax purposes, if 75 or more of its gross revenues consists of a speciic “passive” income or 50 or more of its assets are passive. Based on the Company’s revenues and assets in 2014, we strongly believe that the Company is not classiied as a PIAP. Because of the status of PIAP is determined by intensive facts made on annual basis, there is no guarantee that the Company is not or will not be classiied as a PIAP. The following discussion regarding “Dividends” and “Sales or Other Transfers of the ADSs or Common Stocks” are made on the basis that the Company will not be classiied as a PIAP for the U.S.A Federal income tax purposes.