The Federal Republic of Germany and the Republic of Indonesia have agreed at the signing at Bonn on October 30th, 1990 of the Agreement between the two States for the avoidance of double taxation with respect to taxes on income and capital upon the following provisions which shall form an integral part of the said Agreement.
(1) With reference to Article 5 paragraph (5):
An agent of a German enterprise acting as a "representative of a foreign trading company" in the Republic of Indonesia in accordance with the respective provisions of the Indonesian Laws and Regulations shall not constitute a permanent establishment as far as his activities are confined to the limits provided for in aforementioned provisions of the Indonesian Laws and Regulations.
(2) With reference to Article 7:
- (a) In the determination of the profits of a building site or construction, assembly or installation project there shall be attributed to that permanent establishment in the Contracting State in which the permanent establishment is situated only the profits resulting from the activities of the permanent establishment as such. If machinery or equipment is delivered from the head office or another permanent establishment of the enterprise or a third person in connection with those activities or independently therefrom there shall not be attributed to the profits of the building site or construction, assembly or installation project the value of such deliveries.
- (b) Income derived by a resident of a Contracting State from planning, project, construction or research activities as well as income from technical services exercised in that State in connection with a permanent establishment situated in the other Contracting State, shall not be attributed to that permanent establishment.
- (c) In respect of paragraph (1) of Article 7, profits derived from the sale of goods or merchandise of the same or similar kind as those sold, or from other business activities of the same or similar kind as those effected, through that permanent establishment, may be considered attributable to that permanent establishment if it is proved, including by photocopy or tape-recorder that:
- (aa) this transaction has been resorted to in order to avoid taxation in the Contracting State where the permanent establishment is situated; and
- (bb) the permanent establishment in any way was involved in this transaction.
It is understood that a permanent establishment of an enterprise is considered to be involved in a transaction of such permanent establishment has signed a contract irrespective of the fact that the delivery is partly undertaken by its enterprise.
(3) With reference to Article 10 and 11:
Notwithstanding the provisions of these Article, dividends and interest may be taxed in the Contracting State in which they arise, and according to the law of that State, if they:
- (a) are derived from rights or debt-claims carrying a right to participate in profits (including income derived from "jouissance" shares or "jouissance" rights, by a sleeping partner from his participation as such from a "partiarisches Darlehen" and from "Gewinnobligationen" within the meaning of the tax law of the Federal Republic of Germany); and
- (b) under the condition that they are deductible in the determination of profits of the debtor of such income.
(4) With reference to Article 19:
It is understood that the provisions of paragraph (1) of Article 19 shall likewise apply in respect of remuneration paid from sources within the Federal Republic of Germany to the staff members of the Goethe-Institut sent to Indonesia.
(5) With reference to Article 23:
Where a company being a resident of the Federal Republic of Germany distributes income derived from sources within Indonesia, paragraph (1) shall not preclude the compensatory imposition of corporation tax on such distributions in accordance with the provisions of German tax law.
FOR THE FEDERAL REPUBLIC OF GERMANY:
FOR THE REPUBLIC OF INDONESIA: