17 October 2016
Indonesia has published the decree ratifying the pending income tax treaty with Laos. The treaty, signed 8 September 2011, is the first of its kind between the two countries.
The treaty covers Indonesia income tax, and Lao tax on profits (income) of enterprises and organizations, and tax on income of individuals.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 6 months within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
The beneficial provisions of Articles 10 (Dividends), 11 (Interest), 12 (Royalties) and 13 (Capital Gains) will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of any share, debt-claim, property or right in respect of which the income is paid or gains are derived was to take advantage of these Articles by means of that creation or assignment. The limitation is included in each of the Articles.
Both countries apply the credit method for the elimination of double taxation.
The treaty will enter into force once the ratification instruments are exchanged, and will apply in respect of withholding taxes from 1 January of the year following its entry into force, and in respect of other taxes from 1 January of the second year.
We’re here to answer any questions you have about the Orbitax products and services.
We’re committed to providing high value, low cost tax research and management solutions.
Our Twitter account is where you can find latest information, news updates, offers and lots more.