Tax Applicable to Shareholders

166 XII. TAXATION

A. Tax Applicable to Shareholders

Income tax on share dividends shall be imposed in accordance with the prevailing laws and regulations. Pursuant to Article 4 paragraph 3 point f of the Law of the Republic of Indonesia No. 7 of 1983 concerning Income Tax, as amended from time to time, last amended by Law No. 36 of 2008 effective from January 1, 2009, dividend or distribution of profit received or earned by Limited Liability Companies as domestic taxpayers, co-operatives, state or regional-government-owned enterprises as a result of their equity investment in any business entity established and domiciled in Indonesia are not subject to income tax, provided that the following requirements are satisfied: 1. dividends are paid out from retained earnings; and 2. in the case where the recipient of a dividend is a limited liability company or a state or regional government-owned enterprise, its ownership in the enterprise paying the dividend must not be less than 25.0 of the total fully paid-up capital. In accordance with the Regulation of the Minister of Finance of the Republic of Indonesia No. 234PMK- 032009 dated December 29, 2009 concerning Certain Investment Sectors Generating Income for Pension Funds Exempted as Object of Income Tax, the income received or accrued by pension funds incorporated under the approval of the Minister of Finance of the Republic of Indonesia are not included as an income tax object, provided that such income is received or accrued from, among others, capital investment, in the form of dividends from shares in limited liability companies listed in the IDX. In accordance with Government Regulation No. 14 of 1997 concerning the Amendment to the Government Regulation No. 14 of 1997 concerning Income Tax on Proceeds from Sale of Shares Transaction at the Stock Exchange and the Circular Letter of the Directorate General of Taxation No. SE-06PJ.41997 dated June 20, 1994, concerning the Withholding of Income Tax on Proceeds from Sale of Shares Transaction at the Stock Exchange, the following provisions shall apply: 1. On any income received or earned by any individual taxpayer or corporate taxpayer from the sale of shares listed in the IDX, a final income tax will be imposed at 0.1 of the gross value of the transactions. Payment of the related income tax payable is to be made as a deduction by the IDX through the stock brokers at the time of payment of the sale transaction of shares; 2. Founding shareholders shall be charged with an additional final income tax of 0.5 of the total value of the Company’s shares at the time of the Initial Public Offering; 3. Payment of the additional income tax payable shall be carried out by the Company in the name of the founding Shareholders by no later than one month following the trade of the shares at the IDX. However, if the founding Shareholders choose not to meet their tax obligations by paying an additional final income tax of 0.5 referred to above, the income tax on gains on sale of founding shares shall be calculated based on the generally applicable income tax rate in accordance with Article 17 of Law No. 7 of 1983, as last amended by Law No. 36 of 2008 concerning Income tax. In accordance with Government Regulation No. 19 of 2009 concerning Income Tax on Dividends received or accrued by domestic individual income taxpayers, income in the form of dividends received or accrued by domestic individual income taxpayers shall be subject a final income tax of 10.0 of the gross amount. Dividends paid to domestic taxpayers including permanent establishments that do not satisfy the provisions of Article 4 paragraph 3 point f of the Law of the Republic of Indonesia No. 7 of 1983 concerning Income Tax as last amended by Law No. 38 of 2008 referred to above, shall be subject to withholding income tax which is 15.0 of the gross amount as set out in Article 23 paragraph 1 of Law No. 7 of 1983 concerning Income Tax as amended from time to time, last amended by Law No. 36 of 167 2008. Furthermore, in accordance with the provisions of Article 23 paragraph 1a, if the taxpayer receiving or earning such dividend income does not possess a tax registration number, the amount of tax withheld is 100.0 higher of the initial tax rate or 30.0 of the gross income. Dividends paid to foreign taxpayers shall be subject to an income tax of 20.0 of the cash paid in the case of cash dividends or 20.0 of the par value in the case of share dividends or a lower tax rate in the event that such dividend payment is made to citizens of a country that has signed the Double Tax Avoidance Agreement Perjanjian Penghindaran Pajak Berganda, the P3B with Indonesia, by fulfilling the requirements set forth in the Director General of Taxation Regulation No. PER-61PJ2009 concerning the Procedures of Implementation of Double Tax Avoidance Agreement, as amended by PER-24PJ2010, in order for such foreign taxpayer to become eligible to lower tax rate facility according to the P3B. Based on the Director General of Taxation Regulation No. PER-61PJ2009 concerning the Procedures of Implementation of Double Tax Avoidance Agreement, as amended by PER-24PJ2010, foreign taxpayers are required to submit a Certificate of Domicile COD of Non-Resident for Indonesia Tax Withholding, namely: 1. Form-DGT 1 or; 2. Form-DGT 2 for bank and foreign taxpayers receiving or earning income through custodians with respect to income from transfer of shares or bonds traded or reported in the capital market in Indonesia, other than interest and dividends, and foreign taxpayers in the form of pension fund, which incorporation has complied with the provisions of the laws and regulations in the partner country and is a tax subject in the partner country. 3. COD Form commonly issued by the partner country in the event that the competent authority in the partner country will not sign the Form DGT-1DGT-2, subject to the following conditions: • The COD form is issued in the English language; • The COD form is issued on or after January 1, 2010; • The COD formis an original document or a legalized true copy acknowledged by the tax office in the jurisdiction where one of the tax withholdercollector is registered as a taxpayer. • The COD formstates, at the minimum, information on the name of the foreign taxpayer; and • The COD form is signed by the authorized officer, their legal representatives, or the authorized officer of the tax office in the P3B partner country or signs similar to a signature in accordance with the common practice in the P3B partner country and the name of the aforementioned officer. In addition to the requirements to submit Form-DGT1 or Form DGT-2 or COD Form from the partner country, according to the Directorate General of Taxation Regulation No. PER-62PJ2009 concerning Prevention of Misuse of the Double Tax Avoidance Agreement as amended by PER-25PJ2010 dated April 30, 2010, the foreign taxpayer must meet the requirements as a beneficial owner or the true owner of the economic benefit arising from such income.

B. Fulfillment of the Company’s Tax Obligations