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1 December 2020

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Indonesia Confirms Completion of Internal Procedures for the Entry into Effect of BEPS MLI for 22 Covered Agreements

According to an update from the OECD, Indonesia deposited on 26 November 2020 its notification confirming the completion of its internal procedures for the entry into effect of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) for its covered agreement (tax treaties). The notification includes 22 out of the 47 agreements Indonesia intends to be covered by the MLI as per its definitive list of reservations and notifications made upon deposit of the ratification instrument for the MLI.

The notification confirming the completion of internal procedures is required because Indonesia has taken the reservation that for the MLI to become effective, Indonesia must first deposit such a notification. As such, the provisions of the MLI will generally apply for the notified covered agreements:

  • with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2021; and
  • with respect to all other taxes, for taxes levied with respect to taxable periods beginning on or after 26 June 2021.

For Indonesia's own application of the MLI in respect of other taxes, however, the MLI will apply for taxes levied with respect to taxable periods beginning on or after 1 January 2022.

The 22 covered agreements include Indonesia's tax treaties with: Australia, Belgium, Canada, Denmark, Finland, France, India, Japan, Luxembourg, Netherlands, New Zealand, Poland, Portugal, Qatar, Russia, Serbia, Singapore, Slovak Republic, South Korea, Sweden, United Arab Emirates, and United Kingdom.

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