Treaty Room - Treaty

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

The

Government

of

the

Republic

of

Indonesia and

the Government of the Republic of Finland,

DESIRING to conclude an Agreement for the avoidance
of double

taxation and the prevention of fiscal evasion

with respect to taxes on income,

HAVE AGREED AS FOLLOWS:

Article

1

PERSONAL SCOPE

This Agreement

shall

apply

to

person who are

residents of one or both of the Contracting States .

. . . I I ...

2

Article

2

TAXES COVERED

1.

apply to

This Agreement shall

taxes

on

income

imposed on behalf of a Contracting State or of its local
authorities,

irrespective

of

the

manner

in

which

they

taxes

on

income

are levied .
2.

There

shall

be

regarded

as

all

taxes imposed on total income,

or on elements of income,

including

the alienation of movable

taxes

on

gains

from

or immovable property.
3.

The

existing

taxes

to

which

the

Agreement

shall

apply are:
a)

in Indonesia:
the

income

tax

imposed

Pajak Penghasilan 1984
the

extent

provided

in

under

the

Undang-undang

(Law No. 7 of 1983)
such

income

tax

company tax imposed under the Ordonans i

and to

law,

the

Pajak Per-

seroan 1925 (State Gazette No. 319 of 1925 as lastly
amended by Law No.
under

the

8 of 1970) and the tax imposed

Undang- undang Pajak at as Bunga,

Dividen

dan Royalty 1970 (Law No. 10 of 1970);
(hereinafter referred to as "Indonesian tax");
b)

in Finland:
( i)

the state income tax;

(ii)

the commu"nal tax;

(iii)

the church tax;

(iv)

the tax withheld at source from non-

and

residents' income;
(he r einaft e r r e f e r r ed t o a s " Finn is h tax " ) .

. . . I I ...

3

4.

The Agreement

substantially
after
to,

shall apply also

similar

the date of

taxes

on

to any identical or

income

which

are

signature of the Agreement

imposed

in addition

or in place of, those referred to in paragraph 3.

The

competent authorities of the Contracting States shall notify
each other of any substantial changes which have been made
in their respective taxation laws.

Article

3

GENERAL DEFINITIONS
1.

For the purposes of this Agreement, unless the context

otherwise requires:
a)

the

term "Indonesia"

Republic

of

comprises the territory of the

Indonesia

as

defined

in

its

laws

and

the adjacent areas over which the Republic of Indonesia has sovereign rights or jurisdiction in accordance
with the provisions of the United Nations Convention
on the Law of the Sea, 1982;
b)

the

term

and,

"Finland"

when

used

in a

territory of the
adjacent

to

the

means

geographical

territorial
with

accordance

of

Finland with respect
the

of

sense,

Finland

means

the

and any area

sea of the Republic of

under the laws of Finland and

in

of

Republic

Republic of Finland,

Finland within which,

exploitation

the

international

law,

the

rights

to the exploration for and

natural

resources

of

the

sea

bed and its sub-soil may be exercised;
c)

the

term "person"

includes an individual,

a company

and any other body of persons;

... I I ...

4

d)

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

e)

the

terms

"enterprise

"enterprise

of

the

of

a

other

Contracting State"

Contracting

State"

and
mean

respectively an enterprise carried on by a resident
of

a

Contracting

State

and

an enterprise

carried

on by a resident of the other Contracting State;
f)

the term "national" means:
any

( i)

individual

possessing

the

nationality

of a Contracting State;
(ii)

any legal person, partnership and association
deriving

its

status

as

such

from

the

laws

in force in a Contracting State;
g)

the term "international traffic" means any transport
by

a

ship

or

aircraft

of

a

Contracting

operated

by

except

when

State,

an

enterprise

the

ship or

aircraft is operated solely between places in the
other Contracting State;
h)

the term "competent authority" means:
( i)

in

Indonesia,

the Minister of Finance or his

authorised representative;
(ii)

in

Finland,

the

Ministry

of

Finance

or

its

authorised representative.
2.

As

regards

the

application

of

the Agreement

by a

Contracting State any term not defined therein shall, unless
the

context

otherwise

requires,

have

the

meaning

which

it has under the law of that State concerning the taxes
to which the Agreement applies.

. .. I I ...

5

Article

4

RESIDENCE
1.
of

For the purposes of this Agreement, the tenn
a

laws
of

Contracting
of

his

other

that

State 11

State,

domicile,

criterion

does not

is

means
liable

residence,
of

a

any person
to

place

similar

tax
of

is

resident

under the

therein

by

reason

management

nature.

include any person who

who,

11

However,

or
the

any
ｴｾｲｭ＠

liable to tax in that

State in respect only of income from sources in that State.
2.
an

Where

by reason

individual

is

a

of

the

resident

provisions

of

both

of

paragraph

Contrac t ing

1

States,

then his status shall be determined as follows:
a)

he

shall

be

deemed

to

be a

residen t

of the

Stat e

in whi ch he has a permanent home available to him;
if he has a permanent home available t o him in both
States,

he shall be deemed to be a resident of the

State with which his personal and economic relations
are closer (centre of vital interests);
b)

if

the

State

in

interests c an no t
a

permanent

which
be

he has his

determined,

centre of vital

or

if

he

has

not

home available to him in either State,

he shall be deemed to be a residen t

of the State in

which he has an habitual abode;

c)

if

he

has

neither

an

of

Contracting

habitual

them,

the

States

abode

in both States o r

competent

shall

in

authorities of the

settle

the

question

by

mutual agreement.
3.
a

Where
person

by

other

reason
than

an

of

the

provisions

individual is

a

of

paragraph

resident

1

of b o th

Contra c ting Stat e s, the compe tent author i ties o f the States
shall s e t t l e t h e que s t i o n by mutual agreement .

. .. I I ...

6

Article

5

PERMANENT ESTABLISHMENT
1.

For the purposes of this Agreement, the term "permanent

establishment"
which

the

means

business

a

fixed

of

an

place

of

business

enterprise

is

wholly

through

or partly

carried on.

2.

The term "permanent establishment" incltrles especially:

a)

a place of management;

b)

a branch;

c)

an office;

d)

a factory;

e)

a workshop;

f)

a mine, an oil or gas well, a quarry or any other

and

place of extraction of natural resources.

3.

The term "permanent establishment" likewise encanpasses:

a)

a

building

tallation

site,

project

connection
project

a

construct ion,

or

assembly

supervisory

therewith,

but

only

or

ins-

activities

where

such

in

site,

or activities continue for a period of more

than six months;
b)

the

furnishing

services,
other

by

of
an

personnel

purpose,

but

services,
enterprise

including
through

consultancy

employees

engaged by the enterprise for

only where

activities

of

that

or
such

nature

continue (for the same or a connected project) within
the

country

for

a

period

or

periods

aggregat i ng

more than three months within any twelve-month period .

. . . I I ...

-

4.

Notwithstanding

Article,

7

the

-

preceding

provisions

the term "permanent establishment"

of

this

shall be deemed

not 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

belonging

to

of a

the

stock of goods or merchandise

enterprise

solely for

the purpose

of storage or display;
c)

the

maintenance

belonging

to

of a

the

stock of goods or merchandise

enterprise

solely for

the purpose

of processing by another enterprise;
d)

the maintenance of a
for

the

purpose

of

fixed place of business solely
purchasing goods or merchandise

or of collecting information, for the enterprise;
e)

the maintenance of a
for

the

purpose

information,
act iv it ies,

of

for

fixed place of business so l ely
advertising,

for

the

supp l y

scientific research or for

which

have

a

preparatory

or

of

similar

auxiliary

character, for the enterprise;
f)

the maintenance
for

of a

fixed place of business

solely

any combination of activities mentioned in sub-

paragraphs a) toe), provided that the overall activity
of

the

fixed place of business resulting

from this

combination is of a preparatory or auxiliary character.
5.
2,

Notwithstanding
where

status

to

tracting

a

person -

the

provisions

on

Contracting State,

paragraphs

1

and

other than an agent of an independent

whom paragraph 7 applies
State

of

behalf
that

of

an

-

is acting

enterprise

of

in a
the

Conother

enterprise shall be deemed to have

... I I ...

8

a

permanent

in respect

establishment

in

the

first-mentioned

State

of any activities which that person undertakes

for the enterprise, if such a person:
a)

has and habitually exercises in the first-mentioned
State

an

name

authority

of

the

to

conclude

enterprise,

contracts

unless

the

in

the

activities

of

such person are limited to those mentioned in paragraph 4 which,
of

business,

if exercised

would

not

through

make

this

a

fixed

fixed

place

place

of

business a permanent establishment tmder the provisions
of that paragraph; or
b)

has
in

no

such

the

authority,

first-mentioned

merchandise

but
State

from which he

habitually
a

stock

maintains

of

goods

regularly delivers

or

goods

or merchandise on behalf of the enterprise.
6.

An insurance enterprise of a Contracting State shall,

except

with

permanent
if

it

risks
a

regard

to

reinsurance,

establishment

in

collects

premiums

situated

therein

representative

who

the

in

that

through

is

not

deemed

other

to

have

Contracting

other
an

an

be

State

employee

agent

of

an

a

State

or

insures

or

through

independent

status within the meaning of paragraph 7.
7.

An

enterprise

of

a

Contracting

State

shall

not

be

deemed to have a permanent est ablishment in the other Contracting

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, provided that
such

persons

business.

are

acting

However,

when

in
the

the

ordinary

activities

course

of

their

of such an agent

are devoted wholly or almost wholly on behalf of t hat enterprise, he shall not be considered an agent of an independent
status within the meaning of this paragraph.

. .. I I ...

9

8.

The

fact

that

a

company which is

Contracting State controls or
which

is

which

carries

through

a
a

resident
on

of

the

business

permanent

is

resident

controlled by a

other
in

a

Contracting

that

other

establishment

or

of a

company

State,

State

or

(whether

otherwise),

shall

not of itself constitute either company a permanent establishment of the other.

Article

6

INCOME FROM IMMOVABLE PROPERTY

1.

Income derived by a resident of a Contracting State

from immovable property (including income from agriculture
or

forestry)

situated

in

the other Contracting State may

be taxed in that other State.
2.

a)

The
to

term
the

have

"immovable

provisions

the

meaning

property"

of

shall,

sub-paragraphs b)

which

it

of the Contracting State

has

under

subject
and
the

c) '
law

in which the property

in question is situated.
b)

The term "immovable property"

shall in any case

include property accessory to immovable property,
livestock
and

and

forestry,

equipment
rights

to

used

in

agriculture

which

the

provisions

of general law respecting landed property apply,
usufruct

of

variable

immovable

or

fixed

property

payments

and

as

rights

to

consideration

f or the working of, or the right to work, mineral
deposits, sources and other natural resources.
c)

Ships

and

aircraft

shall

not

be

regarded

immovable property.

. .. I I ...

as

10
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.
Where

4.

rights

in

corporate

a

the

ownership

of

shares

or

other

company entitles the owner of

rights

to

the

enjoyment

of

corporate

such shares or

immovab l e

property

held by the company, the income from the direct use, letting,
or

use

in any other form of such right

be

taxed

in

the

Contracting

State

to enjoyment may

in which the i mmovable

property is situated.

5.

The provisions of paragraph 1 and 3 shall a l so apply

to

the

income

from

immovable

property

to

income

from

immovable

property used

and

of

an

enterpr i se

for

the

performance of independent personal services.

7

Article

BUSINESS PROFITS
The profits of an enterprise of a Contracting State

1.

shall be taxable only in that

State unless the enterprise

carries on business in the other Contrac ting State through
a

permanent establishment

prise
the

carries

enterprise

so much

of

on

establishment;

business

may be

them
b)

situated there i n.

as

taxed

is

sales

as

aforesaid,

in

the

attributable
in

that

If the entert he

profits

other

State

to

that

other

a)

State

but

of

only

permanent

of

goods

or

merchandise of the same or similar kind as t hose so l d thr ough
that permanent establishment; or c) other business

activ i -

ties

carried on in that other State of the same or sim i lar

kind

as

those

effected

thr ough

that

permanent

estab l ish-

ment.

. ..I I . . .

11

2.

Subject

to

an enterprise

of

the
a

provisions

of

paragraph

Contracting State

carries

3,

on

where

business

in the other Contracting State through a permanent establishment

situated

State

be

therein,

attributed

profits which
distinct
and

to

it might

and

similar

separate

activities

dealing

there
that

in

each

permanent

be expected
enterprise

under

wholly

shall

the

establishment

to make

engaged

same

or

Contracting

if it were a

in

the

similar

independently with

the

the

same

or

c onditions

enterprise

of

wh i ch it is a permanent es t ablishment.
3.

In determining the profits of a permanent establish-

ment,

there

shall be allowed as deductions expenses which

are incurred for the purposes of the permanent establishment,
including
so

executive

incurred , ·whether

and
in

general
the

State

administrative

expenses

in which the

permanent

establishment is situated or elsewhere.
4.

In

data

the

absence

permitting

attributed
assessed

to

in

a

the

establishment
tax
to

laws
the

of

the

of

appropriate

determination

permanent

accounting or other

of

the

establishment,

profits
the

to

be

tax may be

Co ntracting State in which the permanent

is

situated

that

State,

normal profits

of

in
in

accordance
particular

enterprises

with
regard

the

income

being

had

engaged in the same

or similar activities under the same or similar conditions,
provided

that,

on the basis of the available information,

the determination of the profits of the permanent establishment

is

consistent with

the principles

contained

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 .

. . . I I ...

12
6.

Where profits include items of income which are dealth

with
the

separately
provisions

in
of

other

Articles

those

of

Articles

this

shall

Agreement,

not

then

be

affected by

a

Contracting

the provisions of this Article.
Article

8

SHIPPING AND AIR TRANSPORT
1.

Profits

State

from

derived

the

by

operation

an
of

enterprise
ships

or

of

aircraft

in

interna-

tional traffic shall be taxable only in that State.
2.

The

profits

provisions

from

of

paragraph

the participation

1

in a

shall

pool,

also

:a

apply

to

joint business

or an international operating agency.
Article

9

ASSOCIATED ENTERPRISES
1.

Where

a)

an

enterprise

directly

or

of

a

Contracting

indirectly

in

the

State

participates

management,

control

or capital of an enterprise of the other Contracting
State,
b)

the
in

or

same
the

prise

persons

participate

management,
of

a

control

Contracting

or

State

directly

or

capital
and

an

indirectly

of

an

enter-

enterprise

of

the other Contracting State,
and in either case conditions are made or imposed between the
two

enterprises

which differ
independent

in

from

their
those

enterprises,

commercial
which
then

or

financial

would

be

any profits

relations

made

between

which would,

but

for those conditions, have accrued to one of the enterprises,
but,

by

may be

reason
included

of

those

conditions,

have

not

so

accrued,

in the profits of that enterprise and taxed

accordingly.

. .. I I ...

13
2.

Where

of
-

an

a

Contracting

enterprise

of

that

State

includes

State

-

and

in

the

taxes

profits

accordingly

profits on which an enterprise of the other Contracting

State has been charged to tax in that other State and the
prof its so included are by the first-mentioned State claimed
to

be

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
charged

therein

considers

the

on

those

adjustment

profits,

to

the amount of tax

where that

justified.

In

o t her State

determining

such

adjustment, due regard shall be had to the other provisions
of

this

Agreement

and

the

competent

authorities

of

the

Contracting States shall if necessary consult each other.

Article

10

DIVIDENDS
1.

Divide nds

paid

by

a

company

which

is

a

r eside nt

of a Contracting State to a re sident of the other Contrac tin g
State may be taxed in that other State.
2.

However,

such

dividends

may

also

be

taxed

in

the

Contracting State of which the company paying the d i v i dends
is

a

resident

and

according

to

the

laws

of

that

State,

but the tax so charged shall not excee d:
a)

10

per

cent

if

the

beneficial

a

of

partnership)

per

cent

of

the

gross
owner

which

amoun t
is

holds

a

of

the

company

directly

d ividends

(other
at

than

least

25

the capital of the company paying the

dividends;

... I I ...

14
b)

15

per cent

of the

gross amount

of

the dividends

in

all other cases.
This

paragraph

shall

not

affect

the

taxation of the

company in respect of the profits out of which the dividends
are paid.
3.

The

term

income

from

"dividends"

shares,

participating

in

corporate

rights

treatment

as

as

used

in

or other rights,

profits,
which

income

as

is

from

Article

means

not being debt-claims,

well as

subjected
shares

this
income

to

by

the

from

the

same

laws

of

other

taxation
the

State

or which the company making the distribution is a resident.
4.

The provisions . of paragraphs

if

the

of

a

beneficial owner of the dividends,

Contracting

State,

carries

Contracting State of which the
is

a

resident,

therein,

through

or performs

services from a
in

1 and 2 shall not apply

respect

of

a

on

being a

business

permanent

establishment

in that other State

the

the

other

company paying the dividends

dividends

situated

independent personal

fixed base situated therein,
which

in

resident

are

and the holding

paid

is effectively

connected with such permanent establishment or fixed base .
In

such case

the provisions of Article 7 or Article 14, as

the case may be, shall apply.
5.
State

Where a
derives

State,

that

paid

dividends

are

as

provits

or

other State

dividends
insofar

company which is a resident of a Contracting

by the
paid to a

the

holding

income from the other Contracting
may not

impose

company,

except

resident

of

in

respect

that
of

any

tax on the

insofar

as

other

which

the

such

State or
d ividends

are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject
the company 's undistributed profits to a tax on the company 's
undistributed

profits,

und is tributed

profits

even

if

consist

the
wholly

dividends
or

paid

partly

of

or

the

profits

or income arising in such other State.

. .. I I ...

15

6.

Notwithstanding any other provisions of this Agreement,

where a company which is a resident of a Contracting State
has

a

permanent

State,

the

subjected

establishment

profits
to

an

of

the

additional

in accordance with its

in

the

other

Contracting

permanent establishment may be
tax

law,

in

but

that

the

other

State

additional

tax

so

charged shall not exceed 15 per cent of the amount of such
profits

after

deducting

therefrom

income

tax

and

other

taxes on income imposed thereon in such other State.
7.

The provisions of paragraph 6 shall not

provisions

contained

in

any

production

affect the

sharing

contract

or contract of work (or any other similar contract) relating
to

the oil and gas

sector or any

other

mining

sector

concluded on or before 31 December 1983 by the Government
of

Indonesia,

an

instrumentality,

the

relevant

state

oil

and gas company or any other entity thereof with a resident
of Finland.
Article

11

INTEREST
1.
to a

Interest

arising

in

a

Contracting

S t ate

and

paid

resident of the other Contracting State may be taxed

in that other State.
2.

However,

Contracting

such

State

in

interest
which

may

it

also

arises,

be
and

taxed

in

according

the
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 per cent of the gross amount of the interest.
3.

Notwithstanding

the

provisions

interest arising in a Contracting

of

paragraph 2,

State and derived by:

... I I ...

16

a)

in the case of Indonesia:
( i)

the

"Bank

Indonesia"

(the

Central

Bank

of

Indonesia):
(ii)

such other financial institution, the capital
of which
of

is wholly owned by the Government

Indonesia,

time

as

may

be

agreed

upon

from

to time between the Governments of the

Contracting States:
b)

in the case of Finland:
the

( i)

"Suomen

Pankki

(the

11

Central

Bank

of

Finland) :
(ii)

the Finnish Fund

for

Industrial

Development

Co-operation Ltd (FINNFUND): and
(iii)

the Finnish Export Credit Ltd:

shall be exempt from tax in that State.
The

4.

term

11

interest"

as

used

in this Art icle means

income from debt-claims of every

kind,

secured by mortgage,

or not carrying a r i ght

and whethe r

whether

or

not

to participate in the debtor's profits, and in particular,
income
or

from

government

debentures,

securities

including

premiums

and
and

income
priz es

from bonds
a tt aching

to such securities, bonds or debentures, as well as penalty
charges for late payment, and income assimilated to income
from money lent by the taxatio n laws of the State in whi ch
the

income arises,

including inte rest on deferred payment

sales.
5.
if

The provisions of paragraphs 1 and 2 shall not apply
the

of a

benefic i al owner of the int e rest, b e ing a resident

Contracting State,

carries on business i n the other

... I I ...

"

17
Contracting
a

State

permanent

in

that

in

which

the

establishment

other

State

interest

situated

independent

arises,

therein,

personal

through

or

performs

services

from

a fixed base situated therein, and the debt-claim in respect
of

which

with

a)

with

b)

the

interest

such

is

permanent

business

paid

is

effectively

establishment

activities

referred

or

connected

fixed

to

in

base,

or

sub-paragraph

c) of paragraph 1 of Article 7. In such case the provisions
of Article 7 or Article 14, as the case may be, shall apply.
6.

Interest

shall be deemed to arise

in a Contracting

State when the payer is that State itself, a local authority
or

a

resident

of that

State .

Where,

however,

the person

paying the interest, whether he is a resident of a Contracting
Stat e or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness
on which the interest is paid was incurred, and such interest
is

borne

then

by

such permanent

such interest

in which the
is situated.

7.

or

shall be deemed to arise

permanent

Where,

establishment

establishment

by reason of a

fixe d
in

or

base,

the

State

fixed

base

special rel at ion ship betwe en

the payer and the beneficial owner or between both of them
and

some

regard

other

to

the

person,

the amo unt of the in t erest,

debt-claim

for

which

it

is

paid,

having
exceeds

the amount which would have been agreed upon by the payer
and the beneficial owner in the abse nce of such relationship,
the

provisions

last-mentioned
the
of

payments
each

of

this

amount.
shall

Contracting

Article
In

remain
State,

shall

such case,
taxable
due

apply

the

the excess part

according

regard

only to

be i ng

to

t he

had

to

of

laws
the

other provisions of this Agreement.

. .. I I ...

18
Article

12

ROYALTIES
1.

Royalties

arising

in

a

Contracting

State

and

paid

to a resident of the other Contracting State may be taxed
in that other State.
2.

However,

Contracting
the

laws

such

State

royalties

in

of that

which

State,

may also

they arise,

but

if

be

taxed

and

in

the

according

the recipient

is

to
the

beneficial owner of the royalties, the tax so charged shall
not exceed 10 per cent of the gross amount of the royalties,
in the case of royalties of the kind referred to
paragraph a)
amount

of paragraph 3,

of the royalties,

kind referred to
3.

in

in sub-

and 15 per cent of the gross

in the case of royalties of the

sub-paragraphs b)

and c) of paragraph 3.

The term "royalties" as used in this Article means

payments of any kind received as a consideration
a)

for the
of

use of,

literary,

or the right to use,

artistic

any copyright

or scientific work including

cinematograph films, and films or tapes for television
or radio broadcasting;
b)

for

the

use

trade mark,
or

of,

or

design

process,

or

any

the

right

or model,

to use,
plan,

industrial,

any patent,

secret

formula

commercial,

or

scientific equipment;
c)

for

information

concerning

industrial,

commercial

or scientific experience.
4.

The provisions of paragraph 1 and 2 shall not apply

if the beneficial owner of the royalties,
of

a

Contracting

State,

being a resident

carries on business

in

the other

... I I ...

19

Contrc:.ct ing
a

State

permanent

in

that

fixed

which

establishment

other

base

in

State

base,

or

a)

with

paragraph

c)

of

paragraph

through

or

performs

services

from

a

and the right or property in
are

permanent

business

arise,

therein,

personal

royalties

such

b)

situated

therein,

respect of which the
with

royalties

independent

situated

connected

the

paid is

establ i shment

activities
1

effectively
or

referred

of Article

7.

to

In

fixed
in

such

subcase

the provisions of Article 7 or Article 14, as the case may
be, shall apply.
5.

Royalties

shall be deemed to arise

in a Contracting

State when the payer is that State itself, a loc al authority
or

a

resident

of

that

State.

Where,

however,

paying the royalties, whether he is a resident o f

t he person
a Contrac t ing

$tate or not, has in a Contracting State a permanen t establishment or a fixed base in connection with which the liabil i ty
to

pay

borne
such

the

by

royalties was

such permanent

royalties

shall

incurred,

and

establishment

be

deemed

to

such royalt i es are
or fixed

arise

in

base,

the

then

State

in

which the permanent establishment or fixed base is situated.
6.

Where,

by reason

of

a

special

relationship

between

the payer and the beneficial owner or between both of them
and

some other person,

regard to the use,
paid,
by

the

payer

and

relationship,

apply

right

of the royalties,

having

or information for which they are

exceeds the amount which would have been agreed upon

the

such

the amount

only

excess

to
part

the
of

the
the

beneficial
provisions

owner

in

of

this

last - mentioned

amount.

the

shall

payments

the

absence

of

Article

shall

In

case,

such

remain

taxable

according to the laws of each Contracting S t ate, due regard
being had to the other provisions of this Agreemen t .

. . . I I ...

20
Article

13

CAPITAL GAINS
1.

Gains

from

the

derived

alienation

by
of

a

resident

immovable

of

a

property

Contracting
referred

State
to

in

paragraph 2 of Article 6 and situated in the other Contracting
State may be taxed in that other State.
2.

Gains

from the

derived

by

a

alienation of

resident

of

a

shares or other

Contracting

State

corporate

rights

referred to in paragraph 4 of Article 6 may be taxed in the
Contracting

State

in

which

the

immovable

property

held

by

the company is situated.
3.

Gains from the alienation of movable property form i ng

part

of

which an

the

permanent establishment

enterprise of a Contracting State has in t he other

Contracting
fixed

business property of a

base

State

or

available

of
to

movable
a

property

resident

of

a

pertain i ng

to

a

Contracting State

in the other Contracting State for the purpose of performing
independent
the

personal

alienation

with

the

of

whole

services,

such a

including

permanent

enterprise)

or

of

such

gains

establishment
such

fixed

from

(alone or

base,

may

be

taxed in that other State.
4.
in

Gains from the alienation of ships or aircraft operated
in t ernational

State

or

movable

traffic

by an enterprise of a

property

pertaining

to

the

Con t racting
operati on

of

such ships or aircraft, shall be taxable only in that State.
5.

Gains

from the alienation of any propert y other t han

that referred to in the preceding paragraphs of this Art icle,
shall be

taxable only in the Contracting S t ate of which the

alie nator is a resident.

. .. I I ...

21
Arl.:icle

14

INDEPENDENT PERSONAL SERVICES
1.
in

Income
respect

derived

of

by

a

resident

professional

of a

Contracting State

services or other activities of

an independent character shall be taxable only in that State
unless

he

has

the

other

his

activities

a

fixed

Contracting
or

he

base
State

regularly
for

the

is present

available

purpose

in that

of

to

him

in

performing

other State for

a

period or periods exceeding in the aggregate 90 days in any
twelve-month period.

If he has such a

in

for

that

other

State

the

fixed base or remains

aforesaid

period

of

periods,

the income may be taxed in that other State but on l y so much
of

it

from

as

is attributable

his

activities

to that

performed

in

fixed base or is derived
that

other

State

during

the aforesaid period or periods.
2.

The

term

independent
teaching
of

11

professional

scientific,

activities

physicians,

services

literary,

as

well

lawyers,

as

11

includes especially

artistic,
the

engineers,

educational

independent

architects,

or

activities

dentists

and

accountants.

Article

15

DEPENDENT PERSONAL SERVICES
1.
20,

Subject
salaries,

to the provisions of Articles 16,
wages

and

other

18,

19 and

similar remuneration derived

by a resident of a Contracting State in respect of an employment
shall

be

taxable

only

in

that

State

.
remuneration

unless

is exercised in the other Contracting State .
is

so

exercised,

such

as

the employment
If the employment

is derived therefrom

may be taxed in that other State.

. .. I I ...

22
2.

Notwithstanding

remuneration

derived

the
by

a

provisions
resident

of

of
a

paragraph

Contracting

l,

State

in respect of an employment exercised in the other Contracting
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 any twelve-month period, 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

the

provisions

in

the

other State.
3.

Notwithstanding

remuneration
aboard a
by

an

derived

in

respect

of

of this

Article,

an employment

exercised

ship or aircraft operated in international traffic

enterprise

of

a

Contracting

State

shall be

taxable

payments

derived

only in that State.

Article

16

DIRECTORS' FEES
Directors'
by

a

resident

fees

of a

and

other

similar

Contracting State in his capacity as a

member of the board of directors or any other similar organ
of

a

company which

is

a

resident of the other Contracting

State may be taxed in that other State.
Article

17

ARTISTES AND SPORTSMEN
1.
15,

Notwithstanding
income derived by a

the

provisions

resident of a

of

Articles

14

and

Contracting State as

... I I ...

23

an

entertainer,

or

television

such

as

artiste,

a
or

theatre,
a

mot ion

musician,

picture,

or as

a

radio

sportsman,

from his personal activities as such exercised in the other
Contracting State, may be taxed in that other State.
2.

Where income derived directly or indirectly by reason

of entertainment or a sport

contest

accrues

not

to

the

entertainer or sportsman himself but to another person, that
income
14

and

may,

notwithstanding

the

provisions

of Articles

7,

be taxed in the Contracting State in which the

15,

activities of the entertainer or sportsman are exercised.
Notwithstanding

3.
2,

the

provisions

income derived in respect of

of paragraphs

and

1

activities referred to in

paragraph 1 and exercised within the framework of a cultural
or

sports

States

exchange

shall

be

programme

taxable

approved by both Contracting

only

in

the Contracting State of

which the entertainer or sportsman is a resident .

Article

18

PENSIONS
Subject

to

the

provisions

of

Article

pensions

19,

and other similar remuneration arising in a Contracting State
and

paid

to

a

resident

of the

other Contracting State

in

consideration of past employment may be taxed in the firstmentioned State.
Article

19

GOVERNMENT SERVICE
1.

a)

Remuneration,

other

than

Contracting State or a
authority

thereof

to

a

pension,

paid

by

a

statutory body or a local
an

individual

in

respect

... I I ...

24
of

services

authority
b)

However,
in

the

rendered

shall

be

to

that

taxable

State

only

or

in

that

such remuneration shall be
other Contracting

State

body or
State.

taxable only

if

the

services

are rendered in that other State and the individual
is a resident of that State who:
(i)

is a national of that State;or

(ii)

did

not

become

solely

for

a

the

resident

purpose

of

that

State

of

rendering

of

funds

the

services.
2.

a)

Any

pension

by,

a

a

by,

Contracting

local

respect
body

paid

State

authority
of

or

out

or

a

thereof

services

statutory body or

to

rendered

created

an
to

individual
that

or authority shall be taxable

State

in
or

only in that

State.
b)

However,
the
is

such

other
a

pension

shall

Contracting

resident

of,

be

State

and a

if

taxable

only

in

the

individual

national of,

that other

State.
3.

The provisions of Articles 15,

16 and 18 shall apply

to remuneration and pensions in respect of services rendered
in

connection

State

or

a

with

a

statutory

business
body

or

carried on by a
a

Article

local

Contracting

authority

thereof.

20

STUDENTS
1.

Payments

which

a

student

or

business,

technical,

agricultural or forestry apprentice who is or was immediately
before visiting a Contracting State a resident of the other

... I I ...

I
:

25

Contracting State and who is present in the first-mentioned
State

solely for

receives

for

training

shall

the purpose of his education or training

the purpose
not

be

of his

taxed

in

maintenance,
that

State,

education or
provided that

such payments arise from sources outside that State.
2.

A student

higher

education

technical,
was
a

at

a

in

university or otlier
a

agricultural

Contracting
or

State,

forestry

institution for
or

a

business,

apprentice

who

is

or

immediately before visiting the other Contracting State

resident of the first-mentioned State and who is present

in the other Contracting State for a period or periods not
exceeding

in

the

aggregate

183

days

in

the

calendar year

concerned, shall not be taxed in that other State in respect
of remuneration for services rendered in that State, provided
that

the

services

are

in

connect ion

with

his

studies or

training and the remuneration constitutes earnings necessary
for his maintenance .

Article

21

OTHER INCOME
1.

Items of income of a resident of a Contracting State,

not dealt with in the foregoing Articles of this Agreement
shall be
of

taxable

only

in

that

State.

However,

any items

income of a resident of a Contracting State arising in

the other Contracting State may also be taxed in that other
State.
2.

The

provisions

of

paragraph

1

shall

not

apply

to

income, other than in c ome from immovable property as defined
in paragraph 2 of Article 6, if the recipient of such income,
being a resident of a Contracting State, carries on business
in the other Contracting State through a permanent establishment situated therein,
independent

personal

or

performs

services

from

in
a

that

fixed

other
base

State

situated

... I I ...

26

therein,
income

and

the right

is paid

establishment

or property in respect

of which the

is effectively connected with such permanent
or

fixed

base.

In

such

case

the

provisions

of Article 7 or Article 14, as the case may be, shall apply.

22
ａｲｴｩ｣ｾ｟･＠

ELIMINATION OF DOUBLE TAXATION
The

1.

laws

of

continue

to

wherever

arising,

each

govern

in

of
that

except

the

Contracting States

State

where

the

taxation

express

contrary is made in this Agreement.

of

shall

income,

provision

to

the

Where income derived

from a Contracting State is subject to tax in both Contracting
States,
be

relief,

given

in

from

double

accordance

taxation

with

the

on

such income

shall

following

provisions

of

shall be

eliminated

as

this Article.
2.

In

Fin land double

taxation

follows:
a)

Where
in

resident

accordance

may
to

a

be
the

taxed

of

with
in

the

from

of

the

derives

provisions

Indonesia,

provisions

deduction

Finland

of

tax

on

the

Finland

sub-paragraph

income

Agreement,

shall,
b),

which,
subject

allow

income of that

as

person,

a
an

amount equal to the tax on income paid in Indonesia.
Such

deduction

shall

not,

however,

exceed

that

part

of the tax on income, as computed before the deduction
is

given,

which

is

attributable

to

the

income which

may be taxed in Indonesia.
b)

Dividends

paid

Indonesia to a
shall
the

be

a

company which

is

a

resident

of

company which is a resident of Finland

exempt

dividends

Finnish

by

from

would

taxation

law

Finnish tax to the extent
have
if

been
both

exempt

that

from tax under

companies

had

been

residents of Finland.

. .. I I ...

27

c)

Where

in

accordance with

Agreement

income

any

derived

by

provision

a

of

resident

of

the

Finland

is exempt from tax in Finland, Finland may nevertheless,
in

calculating

the

amount

of

tax

on

the

remaining

income of such resident, take into account the exempted
income.
3.

In

Indonesia double

taxation

shall be

eliminated as

follows:
a)

Indonesia, when imposing tax on residents of Indonesia,
may include in the basis upon which such tax is imposed
the

items

of

income

which

may be

taxed

in

Finland

in accordance with the provisions of the Agreement;
b)

Where

a

Finland

resident
and

of

that

Indonesia

income may be

derives
taxed

in

income

from

Finland in

accordance with the provisions of the Agreement,

the

amount of Finnish tax payable in respect of the income
shall

be

allowed

as

tax imposed on that

a

credit against

resident.

the Indonesian

The amount of credit,

however, shall not exceed that part of the Indonesian
tax which is appropriate to the income.

Article

23

NON-DISCRIMINATION
1.

Nationals of a Contracting State shall not be subjected

in the other Contracting 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.
2.

The

taxation

enterprise of a

on

a

permanent

establishment

which

an

Contracting State has in the other Contracting

... I I ...

28

State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State
carrying
be

on

the

construed

same activities.

as . obliging

a

This provision shall not

Contracting

State

to

grant

to

residents of the other Contracting State any personal allowances,
reliefs
civil

and

reduct ions

status

or

for

family

taxation purposes on account

responsibilities which it

of

grants to

its own residents.
3.

Except where the provisions of paragraph 1 of Article

9,

paragraph 7 of Article 11, or paragraph 6 of Article 12,

apply,
an

interest,

enterprise

of

royalties
a

and

Contracting

other disbursements
State

to a

paid by

resident of the

other Contracting State shall, for the purpose of determining
the taxable profits of

such enterprise ,

the

if they had been paid to a resident

same conditions as

be deductible under

of the first-mentioned State.
4.

Enterprises

which

is

of

a

Contracting

wholly or partly owne d

State,

the

or controlled,

capital

of

directly or

indirectly, by one or more residents of the other Contracting
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 firstmentioned State are or may be subjected.
5.
as

Nothing contained in this Article shall be construed
to

prevent

either

Contracting

State

from

limiting

in special sectors of economy to its nationals the enjoyment
of tax incentives and any tax of a preferential nature designed
in pursuance of its p r ogramme of economic development.
6.

In this Article the term "taxation" means taxes which

are the subject of this Agreement.

. .. I I ...

29
Article

24

MUTUAL AGREEMENT PROCEDURE
1.

Where

or

both

of

for

him

in

of

this

a

person

the

Contracting

taxation

not

Agreement,

provided

by

case

the

to

the

of which he

considers

he

the

actions

result

of

or will

one

result

in accordance with the provisions

domestic

is a

States

may,

competent

that

irrespective

of

the

law of those States,

authority of

resident

or,

the

if his

remedies

present his

Con t racting

case

State

comes

under

paragraph 1 of Article 23,

to that of the Contracting State

of which he is a national.

The case must be presented wi thin

three years from the first notification of the action resulting
in

taxation

not

in

accordance

with the

authority

shall

provisions

of

the

Agreement.
2.

The

objection

competent
appears

to

it

to

be

endeavour,

justified and

if

if the

it

is not

itself able to arrive at a satisfactory solution, t o resolve
the

case

by mutual

agreement

with

the competent

authority

of the other Contracting State, with a view to the avoidance
of taxation which is not
In the event

the competent

taxes shall be imposed,
be

allowed

such

in accordance wit h the Agree ment.

by

the

agree ment.

authori t ies reach an agreement,

and refund or credit of taxes shall

Contracting

It

shall

be

States

in

accordance

implemented

with

notwithstanding

any time limits in the domestic law of the Con t rac t ing States.
3.

The competent authorities of the Contracting States

shall endeavour to resolve by mutual agreement any difficul ties
or

doubts

of

the

arising

Agreement .

elimination

of

as

to

the

interpretation or application

They may also consult

double

taxation

in

cases

together
not

f or t h e

provided

in the Agreement.

. .. I I ...

for

30

4.

The

shall

by

competent
mutual

authorities

agreement

of the Agreement and,

of

settle

especially,

the
the

Contracting
mode

of

States

application

the requirements to which

residents of a

Contracting State shall be subjected in order

to

obtain,

in

the

other

exemptions

in

respect

Contracting

of

income

State,

tax reliefs

referred

to

in

or

Articles

10, 11 and 12, received from that other State.
5.

The

may

competent

communicate

authorities

with

each

of reaching an agreement

of

other
in

the

Contracting

directly

the

sense

for

the

States
purpose

of the preceding

paragraphs when it seems advisable in order to reach agreement
to

have

an

oral

exchange

of

opinions,

such

exchange

may

take place through a Commission consisting of representatives
of the competent authorities of the Contracting States.

Article

25

EXCHANGE OF INFORMATION
1.

The

competent

authorities

of

the

Contracting

States

shall exchange such information as is necessary for carrying
out

the

laws

of

provisions
the

is

not

by

a

to

this

Contracting

by the Agreement
contrary

of

the

States

or

of

concerning

the

domestic

taxes

covered

insofar as the taxation thereunder
Agreement.

restricted

Contracting

Agreement

The exchange

by

Article

State

shall

1,
be

any

of

information

information

treated

as

is not

received

secret

in

the

same manner as

information obtained under the domestic laws

of

and

that

State

authorities

shall

(including

be

courts

disclosed
and

only

to

persons

administrative

or

bodies)

involved in the assessment or collection of, the enforcement
or prosecution in respect of, or the determination of appeals
in

re lat ion

persons

or

to,

the

taxes covered by the Agreement.

authorities

such purposes.

shall

use

the

They may disclose the

information
information

only

Such
for

in public

court proceedings or in judicial decisions.

. .. I I ...

31
2.

In

no

case

shall

the provisions of paragraph

1 be

construed so as to jropose on a Contracting State the obligation:
a)

To carry out administrative measures at variance with
the

laws

and

administrative pr act ice of

that

or of

the other Contracting State;
b)

To

supply in format ion which is

not obtainable under

the laws or in the normal course of the administration
of that or of the other Contracting 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 OFFICERS
Nothing
privileges

in

this

Agreement

of diplomatic

agents

shall

affect

the

fiscal

or consular officers under

the general rules of int ernational law or under the provisions
of special agreements.

Article

27

ENTRY INTO FORCE
1.

The Governments of the Contracting States shall notify

each other that the constitutional requirements for the entry
into force of this Agreement have been complied with.
2.
the

The Agreement shall enter into force thirty days after
date

of

the

later of

the notificat ions referred

to

in

paragraph 1 and its provisions shall have effect:

... I I ...

32

(i)

in respect of taxes withheld at source, on income
derived

on or after

year next

following

1

January in the

the year

in

calendar

which

the

Agreement enters into force:
(ii)

in respect

of

other taxes on income,

for taxes

chargeable for any tax year beginning on or after
1

January

in

the

calendar year next

following

the year in which the Agreement enters into force.

Article

28

TERMINATION
This Agreement shall remain in force until terminated
by a Contracting State.

Either Contracting State may terminate

the Agreement, through diplomatic channels, by giving notice
of

termination at

least

six months

before

the end of

any

calendar year following after the period of five years from
the date on which the Agreement enters into force.

In such

event, the Agreement shall cease to have effect:
(i)

in respect of taxes withheld at source, on income
derived

on

or

after

1 January

in

t he

calendar

year next following the year in which the notice
is given:
(ii)

in respect

of other taxes on income,

for taxes

chargeable for any tax year beginning on or after
1

January

in

the

calendar year

next

following

the year in which the notice is given.

IN

WITNESS WHEREOF the

undersigned,

duly authorised

thereto, have signed this Agreement.

. .. I I ...

33

DONE

in

duplicate

day of

q;(

ｊｾ＠
ｴｨｩｳｾ＠

1987, in the English language.

FOR OF THE REP