24 AOUT 2001. - An Act to assent to the Convention between the Kingdom of Belgium and the Republic of Indonesia to avoid double taxation and to prevent tax evasion in respect of income tax, and the Protocol, made in Djakarta on 16 September 1997 (1)

ALBERT II, King of the Belgians,
To all, present and to come, Hi.
The Chambers have adopted and We are convinced that:
Article 1^er. This Act regulates a matter referred to in Article 77 of the Constitution.
Art. 2. The Convention between the Kingdom of Belgium and the Republic of Indonesia to avoid double taxation and to prevent tax evasion on income tax, and the Protocol, made in Djakarta on 16 September 1997, will come out their full and full effect.
Promulgate this law, order that it be clothed with the seal of the State and published by the Belgian Monitor.
Given in Brussels on 24 August 2001.
ALBERT
By the King:
Minister of Foreign Affairs,
L. MICHEL
Minister of Finance,
D. REYNDERS
Deputy Minister for Foreign Affairs,
Ms. A. NEYTS-UYTTEBROECK
Seen and sealed the state seal:
Minister of Justice,
Mr. VERWILGHEN
____
Notes
(1) Session 2000-2001
Senate
Documents. - Bill tabled on 13 March 2001, No. 2-684/1. - Report, no. 2-684/2.
Annales parlementaire; - Discussion. Session of May 3, 2001. - Vote. Session of May 3, 2001.
Room
Documents. - Project transmitted by the Senate, No. 50-1235/1. Text adopted in plenary and subject to Royal Assent, No. 50-1235/2.
Annales parliamentarians. - Discussion. Session of June 14, 2001. - Vote. Session of June 14, 2001.
(2) This Convention entered into force on 7 November 2001.

AGREEMENT
BETWEEN THE KINGDOM OF BELGIUM
AND
THE REPUBLIC OF INDONESIA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
THE GOVERNMENT OF THE KINGDOM OF BELGIUM
AND
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA,
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:
CHAPTER I
SCOPE OF THE AGREEMENT
ARTICLE 1
Personal Scope
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
ARTICLE 2
Tax Covered
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which the Agreement shall apply are in particular :
a) in the case of Belgium:
(i) the individual income tax;
(ii) the corporate income tax;
(iii the income tax on legal entities;
(iv) the income tax on non-residents;
(v) the special levy assimilated to the individual income tax;
(vi) the supplementary crisis tax,
including the prepayments, the surcharges on these taxes and prepayments, and the supplements to the individual income tax;
(hereinafter referred to as "Belgian tax");
(b) in the case of Indonesia:
the income tax imposed under the "Undang - undang Pajak Penghasilan 1984" (Law No. 7 of 1983 as amended);
(hereinafter referred to as "Indonesian tax").
4. The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of substantial changes which have been made in their respective taxation laws.
CHAPTER II
DEFINITIONS
ARTICLE 3
General Definitions
1. For the purposes of this Agreement, unless the context otherwise requires:
a) the term "Belgium" means the territory of the Kingdom of Belgium, including the territorial sea and any other area in the sea and in the air within which the Kingdom of Belgium, in accordance with international law, exercises sovereign rights or its jurisdiction;
b) the term "Indonesia" compris the territory of the Republic of Indonesia as defined in its laws and part of the continental shelf and adjacent seas over which the Republic of Indonesia has sovereignty, sovereign rights or jurisdiction in accordance with international law;
c) the terms "a Contracting State" and "the other Contracting State" mean Belgium or Indonesia as the context requires;
(d) the term "tax" means Belgian tax or Indonesian tax, as the context requires;
e) the term "person" includes an individual, a company and any other body of persons;
(f) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes in the Contracting State of which it is a resident;
(g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" 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;
h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
i) the term "competent authority" means:
(i) in the case of Belgium, the Minister of Finance or his duly authorised representative,
and
(ii) in the case of Indonesia, the Minister of Finance or his duly authorised representative;
(j) the term "national" means:
(i) all individuals possessing the nationality of a Contracting State;
(ii) all legal persons, partnerships and associations deriving their status as such from the laws in force in a Contracting State.
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.
ARTICLE 4
Resident
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. However this term does not include any person who is liable to tax in a Contracting State in respect only of income from sources in that State.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to 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 which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
ARTICLE 5
Permanent Establishment
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially :
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a farm or a plantation;
(g) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3. The term "permanent establishment" likewise encompasses:
a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, where such site, project or activities continue for a period of more than six months;
b) the furnishing of services, including consultancy services, by enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than three months within any period of twelve months.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" 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 of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person -other than an agent of an independent status to whom paragraph 6 applies- is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:
a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph;
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b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.
6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment 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 are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.
7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
CHAPTER III
TAXATION OF INCOME
ARTICLE 6
Income from Immovable Property
1. Income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the consideration right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
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.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
ARTICLE 7
Business Profits
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the may be taxed in the other State, but only so much of them, as is attributable to:
(a) that permanent establishment; gold
b) the sale of goods or merchandise of the same or similar kind as those sold, or to other business transactions of the same or similar kind as those effected, through that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of an interest on business, by way
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an contributionionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an contributionionment as may be customary; the method of contributionionment adopted shall, however, be such that the result shall be in accordance 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.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
ARTICLE 8
Shipping and Air Transport
1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic or from the use or rental of containers which is incidental to such operation shall be taxable only in that State.
2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
ARTICLE 9
Associated Enterprises
Where
a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State,
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b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have increasedd to one of the enterprises, but, by reason of those conditions, have not so increasedd, may be included in the profits of that enterprise and taxed accordingly.
ARTICLE 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting 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 dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed :
a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25 per cent of the capital of the company paying the dividends;
(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 "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well as income - even paid in the form of interest - which is treated as income from shares by the internal tax legislation of the State of which the paying company is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are 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. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other company or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the dividend's undistributed
6. Notwithstanding the provisions of paragraph 5, where a company which is a resident of a Contracting State has in the other Contracting State a permanent establishment, that other State may subject the profits of the permanent establishment, after deduction of the tax which may be levied thereon in accordance with the provisions of Article 7, to an additional tax on deemed distribution of income according to its laws, but the tax so charged shall not exceed 10 per cent of the profits thus reduced.
7. The provision of paragraph 6 shall not affect the provisions contained in any production sharing contracts and contracts of work (or any other similar contracts) relating to oil and gas sector or other mining sector concluded on or before 31 December, 1983, by the Government of Indonesia, its instrumentality, its relevant state oil and gas company or any other entity thereof with a person who is a resident of Belgium.
ARTICLE 11
Interest
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest shall be exempted from tax in the Contracting State in which it arises if it is paid to the other Contracting State or a political subdivision or a local authority thereof, or to the central bank of that other State.
4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures; however, the term "interest" shall not include for the purpose of this Article penalty charges for late payment nor interest regarded as dividends under paragraph 3 of Article 10.
5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent services from a fixed base situated therein, and the debt-claim in respect of which the interest is 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.
6. Interest shall be deemed to arise in a Contracting State when the pay is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State 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 by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the pay and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the pay and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable in the Contracting State in which the interest arises according to the laws of that State.
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, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyrights of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the right to use, industrial, commercial, or scientific, or information experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent services from a fixed base situated therein, and the right or property in respect of which the royalties are 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. Royalties shall be deemed to arise in a Contracting State when the pay is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the pay and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the pay and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the royalties shall remain taxable in the Contracting State in which the royalties arise, according to the laws of that State.
ARTICLE 13
Capital Gains
1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment that (alone or with the whole enterprise) or of such fixed base, may be taxed in
3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.
4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 14
Independent Personal Services
1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State:
a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State;
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(b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 91 days within any period of twelve months; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.
2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
1. Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting 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 period of twelve months, 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 in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated by an enterprise of a Contracting State in international traffic, may be taxed in that State.
ARTICLE 16
Directors' Fees
1. Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or a similar organ or as a partner of a company which is a resident of the other Contracting State may be taxed in that other State.
The preceding provision shall also apply to payments derived in respect of the discharge of functions which, under the laws of the Contracting State of which the company is a resident, are regarded as functions of a similar nature as those exercised by a person referred to in the said provision.
2. Remuneration which a person to whom paragraph 1 applies derives from the company in respect of the discharge of day-to-day functions of a managerial or technical nature shall be taxable in accordance with the provisions of Article 15.
3. The provision of paragraph 2 shall also apply to remuneration derived by a resident of a Contracting State in respect of his personal activity as a working partner of a company, other than a company with share capital, which is a resident of the other Contracting State.
ARTICLE 17
Artists and Athletes
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artist, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such increaseds not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3. Notwithstanding the provisions of paragraphs 1 and 2 income derived by an entertainer or athlete from his personal activities as such shall be exempt from tax in the Contracting State in which these activities are exercised if the activities are substantially supported by public funds or sponsored by the other Contracting State, or by a political subdivision, local authority or statutory body thereof.
ARTICLE 18
Pensions
Subject to the provisions of paragraph 2 of Article 19, pensions 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 first-mentioned State.
ARTICLE 19
Government Service
1. (a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:
(i) is a national of that State;
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(ii) did not become a resident of that State solely for the purpose of rendering the services.
2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.
ARTICLE 20
Professors, Researchers and Students
1. A professor, teacher or researcher who makes a temporary visit to a Contracting State solely for the purpose of teaching or conducting research at a university, college, school or other recognised educational institution, and who is a resident of the other Contracting State shall be exempt from tax in the first-mentioned State for a period not exceeding two years in respect of remuneration for such teaching or research.
2. Payments which a student, apprentice or business trainee who is or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training, receives for the purpose of his maintenance, education or training shall not be taxed in that first-mentioned State, provided that such payments are made to him from sources outside that State.
ARTICLE 21
Other Income
1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income 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, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is 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.
3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of the Agreement and arising in the other Contracting State may also be taxed in that other State.
CHAPTER IV
METHODS OF ELIMINATION OF DOUBLE TAXATION
ARTICLE 22
1. In the case of Belgium, double taxation shall be avoided as follows:
(a) Where a resident of Belgium derives income which may be taxed in Indonesia in accordance with the provisions of this Agreement, other than those of paragraph 2 of Article 10, paragraphs 2 and 7 of Article 11, and paragraphs 2 and 6 of Article 12, Belgium shall exempt such income from tax but may, in calculating the amount of tax on the remaining income of that resident, apply the rate of tax which would have been applicable if such income had not been exempted.
(b) Subject to the provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad, where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are dividends taxable in accordance with paragraph 2 of Article 10, and not exempted from Belgian tax according to sub-paragraph c) hereinafter, interest taxable in accordance with paragraph 2 or 7 of Article 11, or royalties taxable in accordance with paragraph 2 or 6 of Article 12, the Indonesian income
(c) Dividends within the meaning of paragraph 3 of Article 10, derived by a company which is a resident of Belgium from a company which is a resident of Indonesia, shall be exempt from the corporate income tax in Belgium under the conditions and within the limits provided for in Belgian law.
(d) Where, in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in Indonesia, have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in sub-paragraph a) shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been exempted from tax in Indonesia by reason of compensation for the said losses.
2. In the case of Indonesia, double taxation shall be avoided as follows:
a) Indonesia, when imposing tax on residents of Indonesia, may include in the basis upon which such tax is imposed the income which may be taxed in Belgium in accordance with the provisions of the Agreement.
(b) Where a resident of Indonesia derives income from Belgium and such income may be taxed in Belgium in accordance with the provisions of the Agreement, the amount of Belgian tax payable in respect of such income shall be allowed as a credit against the Indonesian tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Indonesian tax which is appropriate to such income.
CHAPTER V
SPECIAL PROVISIONS
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, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, 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 first-mentioned State are or may be subjected.
5. Nothing contained in this Article shall be construed as preventing Belgium :
a) from taxing the profits attributable to a permanent establishment in Belgium of a company which is a resident of Indonesia at the rate of tax provided by the Belgian law;
b) from imposing the movable property prepayment on dividends derived from a holding which is effectively connected with a permanent establishment maintained in Belgium by a company which is a resident of Indonesia.
6. In this Article, the term "taxation" means taxes which are the subject of this Agreement.
ARTICLE 24
Mutual Agreement Procedure
1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to 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 accordance with the Agreement.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement.
4. The competent authorities of the Contracting States shall agree on administrative measures necessary to carry out the provisions of the Agreement and particularly on the proofs to be furnished by residents of either Contracting State in order to benefit in the other State from the exemptions or reductions in tax provided for in the Agreement.
5. The competent authorities of the Contracting States shall communicate directly with each other for the application of the Agreement.
ARTICLE 25
Exchange of Information
1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement insofar as the taxation thereunder is not contrary to the Agreement, in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
b) to supply information 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.
ARTICLE 26
Assistance in Collection
1. Each Contracting State shall endeavour to collect on behalf of the other Contracting State such taxes imposed by that other State as will ensure that any exemption or reduced rate of tax granted under this Agreement by that other State shall not be enjoyed by persons not entitled to such benefits.
2. In no case shall the provisions of this Article be construed so as to impose upon the requested State the obligation to apply any means of enforcement which are not authorised by the legal provisions or regulations of either Contracting State or to take measures which would be contrary to public policy.
ARTICLE 27
Limitation of the Effects of the Agreement
1. Nothing in this Agreement shall affect the fiscal privileges of members of a diplomatic mission or consular post under the general rules of international law or under the provisions of special agreements.
2. The Agreement shall not apply to international organisations, to organs or officials thereof and to persons who are members of a diplomatic mission or consular post of a third State, being present in a Contracting State and not treated in either Contracting State as residents in respect of taxes on income.
CHAPTER VI
FINAL PROVISIONS
ARTICLE 28
Entry into Force
1. This Agreement shall be approved by Belgium and Indonesia in accordance with their respective legal procedures, and shall enter into force on the fifteenth day after the date of exchange of notes indicating such approval.
2. The Agreement shall have effect :
a) with respect to taxes due at source on income credited or payable on or after January 1 in the year next following the year in which the Agreement enters into force;
b) with respect to other taxes charged on income of taxable periods ending on or after December 31 of the year in which the Agreement enters into force.
3. The Agreement between the Kingdom of Belgium and the Republic of Indonesia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and the Protocol signed at Brussels on November 13th, 1973, shall terminate and cease to be effective in relation to any tax for any period for which this Agreement has effect in accordance with paragraph 2 of this Article as respects that tax.
ARTICLE 29
Termination
This Agreement shall remain in force until terminated by a Contracting State; but either Contracting State may terminate the Agreement, through diplomatic channels, by giving to the other Contracting State written notice of termination not later than the 30th June of any year calendar from the fifth year following that in which the Agreement entered into force. In the event of termination before July 1 of such year, the Agreement shall cease to have effect :
a) with respect to taxes due at source on income credited or payable at latest on December 31 in the year in which the notice of termination is given;
b) with respect to other taxes charged on income of taxable periods ending before December 31 of the same year.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement and have affixed thereto their seals.
DONE in duplicate at Jakarta, this september 16, 1997, in the English language.
FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM :
FOR THE GOVERNMENT OF THE REPUBLIC OF INDONESIA :
State may terminate the Agreement, through diplomatic channels, by giving to the other Contracting State written notice of termination not later than the 30th June of any calendar year from the fifth year following that in which the Agreement entered into force. In the event of termination before July 1 of such year, the Agreement shall cease to have effect :
a) with respect to taxes due at source on income credited or payable at latest on December 31 in the year in which the notice of termination is given;
b) with respect to other taxes charged on income of taxable periods ending before December 31 of the same year.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement and have affixed thereto their seals.
DONE in duplicate at Jakarta, this september 16, 1997, in the English language.
FOR THE GOVERNMENT OF THE REPUBLIC OF INDONESIA :
FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM :
PROTOCOL
At the moment of signing the Agreement between the Kingdom of Belgium and the Republic of Indonesia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned have agreed that the following provisions shall form an integral part of the said agreement:
Ad Article 7, paragraph 1
It is understood that profits derived by an enterprise of a Contracting State within the other Contracting State from sale of goods or merchandise of the same or similar kind as those sold, or from other business transactions of the same or similar kind as those effected, through the permanent establishment situated therein, may be taxed in such other Contracting State, if the permanent establishment had contributed in any manner in the making of such sales or transactions.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Protocol and have affixed thereto their seals.
DONE in duplicate at Jakarta, september 16, this 1997, in the English language.
FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM :
FOR THE GOVERNMENT OF THE REPUBLIC OF INDONESIA :
PROTOCOL
At the moment of signing the Agreement between the Kingdom of Belgium and the Republic of Indonesia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned have agreed that the following provisions shall form an integral part of the said agreement:
Ad Article 7, paragraph 1
It is understood that profits derived by an enterprise of a Contracting State within the other Contracting State from sale of goods or merchandise of the same or similar kind as those sold, or from other business transactions of the same or similar kind as those effected, through the permanent establishment situated therein, may be taxed in such other Contracting State, if the permanent establishment had contributed in any manner in the making of such sales or transactions.
IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Protocol and have affixed thereto their seals.
DONE in duplicate at Jakarta, this september 16, 1997, in the English language.
FOR THE GOVERNMENT OF THE REPUBLIC OF INDONESIA :
FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM :
CONVENTION ENTER LE ROYAUME DE BELGIQUE ET LA REPUBLIQUE DOUBLE IMPOSITION ET A PREVENIR L'EVASION FISCALE EN MATIERE D'IMPOTS SUR LE REVENU
THE GOVERNMENT OF THE BELGIUM ROYAUME
AND
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA,
DESIRING to conclude a Convention to Avoid Double Taxation and Prevent Tax Evasion in Income Tax, agreed on the following provisions:
CHAPTER I^er. - APPROVAL CHAMP OF THE CONVENTION
Article 1^er
PERSONS
This Convention applies to persons who are residents of a Contracting State or both Contracting States.
Article 2
IMPOTS VISES
1. This Convention applies to income taxes collected on behalf of a Contracting State, its political subdivisions or local authorities, regardless of the system of collection.
2. Income taxes are considered to be taxed on total income or income elements, including taxes on gains from the alienation of movable or real property, taxes on the total amount of wages paid by companies, and taxes on surplus-values.
3. Current taxes to which the Convention applies include:
(a) with regard to Belgium:
(i) the tax of natural persons;
(ii) corporate tax;
(iii) corporation tax;
(iv) non-resident tax;
(v) the special contribution assimilated to the tax of natural persons;
(vi) the complementary contribution of crisis;
including pre-payments, additional cents to such taxes and pre-payments, and additional taxes to the tax of natural persons,
(hereinafter referred to as "Belgian tax");
(b) with regard to Indonesia:
income tax collected under the "Undang-undang Pajak Penghasilan 1984" (Act No. 7 of 1983 as amended);
(hereinafter referred to as "Indonesian tax").
4. The Convention also applies to taxes of an identical or similar nature that would be established after the date of signature of the Convention and that would be in addition to or replace existing taxes. The competent authorities of the Contracting States shall communicate the significant changes to their respective tax laws.
CHAPTER II. - DEFINITIONS
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context requires a different interpretation:
(a) the term "Belgium" means the territory of the Kingdom of Belgium, including the territorial sea as well as the maritime zones and the airspace on which, in accordance with international law, the Kingdom of Belgium exercises sovereign rights or jurisdiction;
(b) the term "Indonesia" includes the territory of the Republic of Indonesia as defined in its legislation and parts of the continental shelf and adjacent seas on which the Republic of Indonesia exercises, in accordance with international law, sovereignty, sovereign rights or jurisdiction;
(c) the terms "a Contracting State" and "the other Contracting State" mean, in accordance with the context, Belgium or Indonesia;
(d) the term "tax" means, depending on the context, Belgian tax or Indonesian tax;
(e) the term "person" includes individuals, societies and all other groups of persons;
(f) the term "society" means any corporation or entity that is considered to be a legal entity for purposes of taxation in the Contracting State of which it is a resident;
(g) the terms "company of a Contracting State" and "company of the other Contracting State" shall, respectively, designate a business operated by a resident of a Contracting State and a business operated by a resident of the other Contracting State;
(h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except where the ship or aircraft is operated only between points in the other Contracting State;
(i) the term "competent authority" means:
(i) in respect of Belgium, the Minister of Finance or his duly authorized representative, and
(ii) with respect to Indonesia, the Minister of Finance or his duly authorized representative;
(j) the term "national" means:
(i) all natural persons who have the nationality of a Contracting State;
(ii) all legal persons, societies of persons and associations constituted in accordance with the legislation in force in a Contracting State.
2. For the purposes of the Convention by a Contracting State, any expression not defined therein shall have the meaning assigned to it by the law of that State concerning the taxes to which the Convention applies, unless the context requires a different interpretation.
Article 4
RESIDENT
1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is subject to tax in that State, because of his domicile, residence, management seat or any other similar criterion. However, this term does not include persons who are subject to tax in a Contracting State only for income from sources in that State.
2. When, according to the provisions of paragraph 1^er, a natural person is a resident of the two Contracting States, his situation is settled as follows:
(a) that person is considered to be a resident of the State where the person has a permanent home; if it has a permanent home in both states, it is considered to be a resident of the State with which its personal and economic ties are the narrowest (centre of vital interests);
(b) if the State in which that person has the centre of his or her vital interests cannot be determined, or if it does not have a permanent home in any of the States, it is considered to be a resident of the State in which it normally resides;
(c) if the person normally stays in the two States or if he or she does not normally stay in any of them, the competent authorities of the Contracting States shall decide the matter by mutual agreement.
3. When, according to the provisions of paragraph 1^era person other than a natural person is a resident of the two Contracting States and is considered to be a resident of the State where his or her effective management seat is located.
Article 5
STABLE FULLING
1. For the purposes of this Convention, the term "stable establishment" means a fixed business facility through which a company operates all or part of its business.
2. The term "stable establishment" includes:
(a) a steering seat;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) farm or planting;
(g) a mine, oil or gas well, a career or any other place of extraction of natural resources.
3. The term "stable establishment" also includes:
(a) a construction or assembly site or monitoring activities in the construction or construction site, where such work or activities continue for a period of more than six months;
(b) the provision of services, including consultancy services, by a company acting through employees or other personnel engaged by the company for that purpose, but only when such activities continue (for the same project or related project) in the territory of the country for one or more periods representing a total of more than three months within a period of any twelve months.
4. Notwithstanding the preceding provisions of this article, it is considered that there is no "stable establishment" if:
(a) the use of facilities for the sole purpose of storage or exposure of goods owned by the company;
(b) goods belonging to the enterprise are stored for storage or exposure purposes only;
(c) goods belonging to the enterprise are stored for the sole purpose of processing by another company;
(d) a fixed business facility is used for the sole purpose of purchasing goods or collecting information for the company;
(e) a fixed business facility is used for the sole purpose of carrying out any other preparatory or auxiliary activity for the enterprise;
(f) a fixed business facility shall be used only for the purpose of the cumulative year of activities referred to in subparagraphs (a) to (e), provided that the overall activity of the fixed business facility resulting from this accumulated business shall be preparatory or auxiliary.
5. Notwithstanding the provisions of paragraphs 1^er and 2, where a person - other than an agent enjoying an independent status to which paragraph 6 applies - acts in a Contracting State for an enterprise of the other Contracting State, that undertaking shall be deemed to have a permanent establishment in the first Contracting State for all the activities that the person carries on for it if the said person:
(a) the State shall have the authority to enter into contracts on behalf of the enterprise, unless the activities of that person are limited to those listed in paragraph 4 and which, if carried out in a fixed business facility, would not make the fixed business facility a permanent establishment within the meaning of that paragraph; or
(b) having no such power, usually keeps in the first State a stock of goods on which it regularly collects goods for the purpose of delivery on behalf of the company.
6. A company of a contacting State is not considered to have a permanent establishment in the other Contracting State solely because it operates there through a broker, a general commissioner or any other agent enjoying an independent status, provided that such persons act within the ordinary framework of their activity.
However, where the activities of such an agent are carried out exclusively or almost exclusively on behalf of that undertaking, that agent is not considered an independent agent within the meaning of this paragraph.
7. The fact that a corporation that is a resident of a Contracting State controls or is controlled by a corporation that is a resident of the other Contracting State or that operates therein (either through a permanent establishment or not) is not sufficient in itself to make any of these companies a permanent establishment of the other.
CHAPTER III. - IMPOSITION OF REVENUS
Article 6
REVENUS IMMOBILIERS
1. The income derived by a resident of a Contracting State from real property located in the other Contracting State shall be taxable in that other State.
2. The term "real property" has the meaning assigned to it by the law of the Contracting State in which the property is located. The term includes, in any case, accessories, dead or alive livestock of farms and forests, the rights to which the provisions of private law apply in respect of land ownership, the usufruct of real property and the rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, sources and other natural resources; ships, ships and aircraft are not considered real property.
3. The provisions of paragraph 1^er applies to income derived from direct exploitation or enjoyment, lease or charter, as well as any other form of exploitation of real property.
4. The provisions of paragraphs 1^er and 3 also apply to income from real property of a business as well as to income from real property used in the exercise of an independent profession.
Article 7
BENEFICES DES ENTREPRISES
1. The profits of an enterprise of a Contracting State shall be taxable only in that State, unless the enterprise carries on business in the other Contracting State through a permanent establishment located therein. If the company operates in such a way, the profits of the enterprise are taxable in the other State but only to the extent that they are attributable:
(a) to that permanent establishment, or
(b) the sale of goods of an identical or similar nature to those sold by the permanent establishment or other commercial activities of an identical or similar nature to those carried out by that establishment.
2. Subject to the provisions of paragraph 3, where a business of a Contracting State carries on business in the other Contracting State through a permanent establishment located therein, it shall be charged, in each Contracting State, to that permanent establishment the profits that it could have realized if it had constituted a separate undertaking carrying out identical or similar activities under identical or similar conditions and acting independently with the enterprise of which it constitutes a permanent establishment.
3. In order to determine the benefits of a permanent establishment, deductions are allowed for the expenses incurred for the purposes of this permanent establishment, including the executive expenses and general administrative expenses so exposed, either in the State where the permanent establishment is located or elsewhere. However, no deduction is allowed for amounts that would, if any, be paid (other than the reimbursement of costs incurred) by the permanent establishment at the company's central office or at any of its offices, such as royalties, fees or other similar payments, for the use of patents or other fees, or as a commission, for specific services rendered or for a financial activity, or, unless Similarly, in the calculation of the profits of a permanent establishment, there shall be no account of the amounts (other than the reimbursement of costs incurred) carried by the permanent establishment at the rate of the central office of the enterprise or of any of its other offices, such as royalties, fees or similar payments, for the use of patents or other fees, or as a commission for specific services rendered or for any directional activity or
4. If it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of a distribution of the total profits of the enterprise between its various parties, no provision in paragraph 2 shall prevent that Contracting State from determining the taxable profits according to the distribution in use; However, the method of distribution adopted must be such that the result obtained is consistent with the principles contained in this article.
5. No profit is charged to a permanent establishment because it simply purchased goods for the company.
6. For the purposes of the preceding paragraphs, the benefits to be charged to the permanent establishment are determined annually on the same basis, unless there are valid and sufficient grounds to proceed otherwise.
7. Where profits include income elements treated separately in other articles of this Convention, the provisions of these articles are not affected by the provisions of this article.
Article 8
MARITIME AND AERIENNE NAVIGATION
1. The profits of an enterprise of a Contracting State arising from the operation, in international traffic, of ships or aircraft, or the use or lease of containers that constitute an incidental activity in relation to that operation, shall be taxable only in that State.
2. The provisions of paragraph 1^er also applies to benefits arising from participation in a pool, a joint operation or an international operating organization.
Article 9
ENTREPRISES ASSOCIEES
When
(a) a business of a Contracting State directly or indirectly participates in the direction, control or capital of a business of the other Contracting State, or
(b) the same persons directly or indirectly participate in the direction, control or capital of a business of a Contracting State and a business of the other Contracting State,
and that, in both cases, both companies are, in their commercial or financial relations, bound by agreed or imposed conditions, that differ from those that would be agreed between independent companies, the profits that, without these conditions, would have been realized by one of the companies but could not be in fact because of these conditions, may be included in the profits of that undertaking and imposed accordingly.
Article 10
DIVIDENDS
1. Dividends paid by a corporation that is a resident of a Contracting State to a resident of the other Contracting State shall be taxable in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the corporation paying the dividends is a resident, and according to the law of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of dividends if the beneficial owner is a corporation that holds directly at least 25 per cent of the capital of the corporation that pays the dividends;
(b) 15 per cent of the gross amount of dividends in all other cases.
This subsection does not affect the corporation's taxation of profits that are used to pay dividends.
3. The term "dividends" used in this article refers to income from shares, shares or benefits, shares of mine, share of founder or other share of beneficiaries with the exception of receivables, as well as incomes - even attributed in the form of interest - subject to the same tax regime as income from shares by the law of the State whose debiting society is a resident.
4. The provisions of paragraphs 1^er and 2 shall not apply where the beneficial owner of the dividends, a resident of a Contracting State, exercises in the other Contracting State whose dividend-paying corporation is a resident, i.e., an industrial or commercial activity through a permanent establishment located therein, or an independent occupation by means of a fixed base located therein, and that the dividend-generating interest is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
5. Where a corporation that is a resident of a Contracting State derives from the profits or income of the other Contracting State, that other State may not collect any tax on the dividends paid by the corporation, except to the extent that such dividends are paid to a resident of that other State or to the extent that the dividend-generating interest is effectively connected to a permanent establishment or to a fixed base located in that other State, or prelever any
6. Notwithstanding the provisions of paragraph 5, where a corporation that is a resident of a Contracting State has a permanent establishment in the other Contracting State, that other State may submit, in accordance with its legislation, the profits of the permanent establishment, after deduction of the tax that may be collected on those profits under the provisions of Article 7, to an additional tax on the alleged income distributed, but the tax so charged shall not exceed 10
7. The provisions of paragraph 6 do not affect the provisions contained in the production sharing contracts ("production sharing") and labour contracts (or other similar contracts) relating to the oil and gas sectors or any other mining sector entered into by 31 December 1983 by the Government of Indonesia, its public bodies, its oil and gas company concerned or any other entity of that Government, with a person who is a resident of Belgium.
Article 11
INTERETS
1. Interest arising from a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.
2. However, these interests are also taxable in the Contracting State in which they arise and according to the law of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest shall be exempted from tax in the Contracting State from which it arises in respect of interest paid to the other Contracting State or to any of its political subdivisions or local authorities or to the central bank of that other State.
4. The term "interest" used in this section refers to the income of receivables of any kind, whether or not accompanied by mortgage guarantees or an interest clause in the debtor's profits, including income from public funds and borrowing obligations, including premiums and lots attached to these securities; However, this term does not include, within the meaning of this section, penalties for late payment or interest treated as dividends under section 10, paragraph 3.
5. The provisions of paragraphs 1^er, 2 and 3 shall not apply where the beneficial owner of the interest, a resident of a Contracting State, exercises in the other Contracting State in which the interests arise, either an industrial or commercial activity through a permanent establishment located therein or an independent occupation by means of a fixed base located therein, and that the interest-generating debt is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
6. Interest shall be deemed to arise from a Contracting State where the debtor is that State itself, a political subdivision, a local authority or a resident of that State. However, where the debtor of interest, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment, or a fixed base, for which the debt giving rise to the payment of interest has been contracted and which bears the burden of such interests, these shall be deemed to arise from the State where the permanent establishment or fixed base is located.
7. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of interest, taking into account the debt for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this Article shall apply only to the latter amount. In this case, the surplus portion of the payments shall remain taxable, in accordance with its legislation, in the Contracting State from which the interest arises.
Article 12
REDEVANCES
1. Royalties from a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.
2. However, such royalties are also taxable in the Contracting State in which they arise and according to the law of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.
The term "debtedness" used in this article means the remuneration of any kind paid for the use or concession of the use of a copyright on a literary, artistic or scientific work, including film films and films or tapes registered for radio or television, a patent, a trademark or a trade mark, a drawing or a model, a plan, a plan
4. The provisions of paragraphs 1^er and 2 shall not apply where the beneficial owner of the royalties, a resident of a Contracting State, carries out in the other Contracting State in which the royalties arise, either an industrial or commercial activity through a permanent establishment located therein or an independent occupation by means of a fixed base located therein, and that the right or property generating the royalties is effectively connected to it. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
5. The royalties shall be deemed to come from a Contracting State when the debtor is that State itself, a political subdivision, a local authority or a resident of that State. However, where the debtor of royalties, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment, or a fixed base, for which the contract giving rise to the payment of royalties has been concluded and which bears the charge of such royalties, these shall be deemed to be from the State where the permanent establishment or fixed base is located.
6. Where, because of special relations between the debtor and the beneficial owner or between the debtor and the other person maintain with third persons, the amount of royalties, taking into account the benefit for which they are paid, exceeds the amount agreed upon by the debtor and the beneficial owner in the absence of such relations, the provisions of this section apply only to the latter amount. In this case, the excess portion of royalties shall remain taxable, in accordance with its legislation, in the Contracting State from which royalties arise.
Article 13
GAINS EN CAPITAL
1. The gains derived by a resident of a Contracting State from the alienation of real property referred to in Article 6 and situated in the other Contracting State shall be taxable in that other State.
2. The gains from the alienation of movable property that are part of the assets of a permanent establishment that a business of a Contracting State has in the other Contracting State, or of movable property that belong to a fixed base of which a resident of a Contracting State disposes in the other Contracting State for the exercise of an independent profession, including such gains from the alienation of that permanent establishment (ully or with
3. The gains that a business of a Contracting State derives from the alienation of ships or aircraft operated in international traffic, or of movable property assigned to the operation of such ships or aircraft, shall be taxable only in that State.
4. Gains from the alienation of all property other than those referred to in paragraphs 1^er, 2 and 3 shall be taxable only in the Contracting State of which the assignor is a resident.
Article 14
INDEPENDENT PROFESSIONS
1. The income derived by a resident of a Contracting State from a liberal profession or other independent activities shall be taxable only in that State except in the following cases where such income is also taxable in the other Contracting State:
(a) if the resident has, in the other Contracting State, a fixed basis for the exercise of his or her activities; in such case, only the fraction of the income attributable to that fixed base shall be taxable in the other Contracting State, or
(b) if the stay in the other Contracting State extends over a period or periods of a total duration of 91 days in any period of twelve months; in that case, only the fraction of the income derived from the activities carried out in that other State is taxable in that other State.
2. The term "professional liberal" includes independent scientific, literary, artistic, educational or educational activities, as well as independent activities of doctors, lawyers, engineers, architects, dentists and accountants.
Article 15
PROFESSIONS
1. Subject to the provisions of Articles 16, 18, 19 and 20, wages, salaries and other similar remuneration that a resident of a Contracting State receives under an employee employment shall be taxable only in that State, unless employment is exercised in the other Contracting State. If the employment is exercised, the remuneration received as such is taxable in that other State.
2. Notwithstanding the provisions of paragraph 1, the remuneration of a resident of a Contracting State in respect of an employee employed in the other Contracting State shall be taxable only in the first State if:
a) the beneficiary stays in the other State for a period or periods not exceeding a total of 183 days in any period of twelve months, and
(b) compensation shall be paid by an employer or on behalf of an employer who is not a resident of the other State, and
(c) the pay charge is not borne by a permanent establishment or a fixed base that the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration received for an employee employed on board a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.
Article 16
TANTIEMES
1. The fortieths, presence tokens and similar remuneration that a resident of a Contracting State receives as a member of the board of directors or of a similar body or as a member of a corporation that is a resident of the other Contracting State may be taxed in that other State.
The foregoing provision also applies to remuneration received because of the performance of functions which, under the legislation of the Contracting State whose company is a resident, are treated as functions of a nature similar to those exercised by a person referred to in that provision.
2. Compensation that a person to whom subsection 1^er applies to the corporation because of the exercise of a day-to-day direction or technical activity shall be taxable in accordance with the provisions of section 15.
3. The provision of paragraph 2 also applies to remuneration derived by a resident of a Contracting State from his or her personal activity as an active partner in a corporation other than a share corporation, which is a resident of the other Contracting State.
Article 17
ARTISTS AND SPORTIFS
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State from his or her personal activities in the other Contracting State as an artist of the spectacle, such as a theatre, cinema, radio or television artist, or a musician, or as a sportsman, may be taxed in that other State.
2. Where the income of activities that an entertainer or a sportsperson exercises personally and in this capacity is attributed not to the artist or to the athlete himself but to another person, such income shall be taxable, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State where the activities of the artist or athlete are carried out.
3. Notwithstanding the provisions of paragraphs 1^er and 2, income derived by a performance artist or a sportsman from activities that he or she exercises personally in that capacity is exempt from tax in the Contracting State in which such activities are carried out if the activities are financed for a large part by means of public funds or sponsored by the other Contracting State, by one of its political subdivisions or local authorities or by a public law body of that State.
Article 18
PENSIONS
Subject to the provisions of Article 19, paragraph 2, pensions and other similar remuneration, derived from a Contracting State and paid to a resident of the other Contracting State for an earlier employment, shall be taxable in the first State.
Article 19
PUBLIC FUNCTIONS
1. (a) Compensation, other than pensions, paid by a Contracting State or any of its political subdivisions or local authorities to a natural person, for services rendered to that State or subdivision or community, shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and if the natural person is a resident of that State who:
(i) has the nationality of that State, or
(ii) did not become a resident of that State for the sole purpose of rendering the services.
2. (a) Pensions paid by a Contracting State or any of its political subdivisions or local authorities, either directly or by debiting from funds that they have constituted, to a natural person, for services rendered to that State or to that subdivision or community, shall be taxable only in that State.
(b) However, such pensions shall be taxable only in the other Contracting State if the natural person is a resident of that State and has its nationality.
3. The provisions of Articles 15, 16 and 18 apply to remuneration and pensions paid for services rendered in an industrial or commercial activity carried out by a Contracting State or one of its political subdivisions or local authorities.
Rule 20
PROFESSORS, HEADERS AND ASSESSMENTS
1. A teacher, a member of the teaching staff or a researcher, who temporarily resides in a Contracting State for the sole purpose of teaching or conducting research in a university, college, school or other recognized educational institution, and who is a resident of the other Contracting State, is exempted from tax in the first State for a period of not more than two years because of the remuneration for that educational activity or
2. The sums that a student, apprentice or trainee who is, or who was immediately before going to a Contracting State, a resident of the other Contracting State and who stays in the first State for the sole purpose of pursuing his or her studies or training shall be paid to cover his or her maintenance, education or training expenses shall not be taxable in that first State, provided that they arise from sources outside that State.
Article 21
OTHER REVENUS
1. The income elements of a resident of a Contracting State, wherever they arise, which are not dealt with in the preceding articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1^er shall not apply to income other than income derived from real property as defined in Article 6, paragraph 2, where the beneficiary of such income, resident of a Contracting State, carries on in the other Contracting State, either an industrial or commercial activity through a permanent establishment located therein, or an independent occupation by means of a fixed base located therein, and that the right or property actually connected therein. In this case, the provisions of Article 7 or Article 14, as applicable, shall apply.
3. Notwithstanding the provisions of paragraphs 1 and 2, the income elements of a resident of a Contracting State that are not dealt with in the preceding articles of this Convention and that come from the other Contracting State shall also be taxable in that other State.
CHAPTER IV. - METHODS FOR ELIMINATION
Article 22
1. With regard to Belgium, double taxation is avoided as follows:
(a) Where a Belgian resident receives income that is taxable in Indonesia in accordance with the provisions of this Convention, with the exception of those of articles 10, paragraph 2, 11, paragraphs 2 and 7, and 12, paragraphs 2 and 6, Belgium exempts from tax these incomes but may, in calculating the amount of its taxes on the rest of the income of that resident, apply the same rate as if the income in question had not been exempted.
(b) Subject to the provisions of Belgian law relating to the imputation on Belgian tax of taxes paid abroad, where a Belgian resident receives income elements that are included in his or her total income subject to Belgian tax and that consist of taxable dividends in accordance with Article 10, paragraph 2, and not exempted from Belgian tax under (c) below, in taxable interest in accordance with Article 11, paragraphs 2 or 7,
(c) Dividends within the meaning of Article 10, paragraph 3, that a corporation that is a resident of Belgium receives from a company that is a resident of Indonesia are exempted from corporate tax in Belgium, under the conditions and limits provided for in Belgian law.
(d) Where, in accordance with Belgian law, losses incurred by a company operated by a Belgian resident in a permanent establishment located in Indonesia have been effectively deducted from the profits of that undertaking for its taxation in Belgium, the exemption provided for in (a) does not apply in Belgium to the profits of other taxable periods that are attributable to that establishment, to the extent that these profits have also been exempted from tax in Indonesia due to their compensation with
2. With regard to Indonesia, double taxation is avoided as follows:
(a) Indonesia may, upon taxation of its residents, include in the taxable basis the income that is taxable in Belgium in accordance with the provisions of the Convention.
(b) When a resident of Indonesia receives income from Belgium and these incomes are taxable in Belgium in accordance with the provisions of the Convention, the amount of Belgian tax due to these revenues is charged to the Indonesian tax due by that resident. However, the amount of imputation cannot exceed the fraction of the Indonesian tax related to these revenues.
CHAPTER V. - SPECIAL PROVISIONS
Article 23
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subject in the other Contracting State to any taxation or obligation relating thereto, which is other or heavier than those to which nationals of that other Contracting State are or may be subject to the same situation, particularly in respect of the residence. This provision also applies, notwithstanding the provisions of section 1^erpersons who are not residents of a Contracting State or both Contracting States.
2. The imposition of a permanent establishment that a business of a Contracting State has in the other Contracting State is not established in that other State in a less favourable manner than the taxation of the enterprises of that other State that exercise the same activity. This provision shall not be construed as requiring a Contracting State to grant personal deductions, deductions and tax reductions to the residents of the other Contracting State on the basis of the situation or family expenses that it grants to its own residents.
3. Unless the provisions of Article 9, Article 11, paragraph 7 or Article 12, paragraph 6, are applicable, the interests, royalties and other expenses paid by an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible, for the determination of the taxable profits of that undertaking, on the same terms as if they had been paid to a resident of the first Contracting State.
4. The undertakings of a Contracting State, whose capital is wholly or partly, directly or indirectly, held or controlled by one or more residents of the other Contracting State, shall not be subject in the first State to any taxation or obligation relating thereto, which is other or heavier than those to which the other similar enterprises of the first State are or may be subject.
5. Nothing in this article shall be construed as preventing Belgium:
(a) to impose at the rate provided by Belgian legislation the benefits of a stable Belgian establishment of a company that is a resident of Indonesia;
(b) to collect the movable pre-account on the dividends associated with an equity interest in a stable establishment in Belgium that is a resident of Indonesia.
6. In this article, the term "taxation" means the taxes that are the subject of this Convention.
Article 24
AMIABLE PROCEDURE
1. Where a person considers that the measures taken by a Contracting State or by the two Contracting States shall result in or result in taxation not in accordance with the provisions of this Convention, the person may, independently of the remedies provided by the domestic law of those States, submit his case to the competent authority of the Contracting State of which the person is a resident or, if the case falls under Article 23, paragraph 1^erto that of the Contracting State of which it has nationality. The case shall be submitted within three years after the first notification of the measure that results in taxation not in conformity with the provisions of the Convention.
2. The competent authority shall endeavour, if the request appears to it to be founded and if it is not itself able to make a satisfactory solution to it, to resolve the case by amicable agreement with the competent authority of the other Contracting State, with a view to avoiding taxation not in conformity with the Convention.
3. The competent authorities of the Contracting States shall endeavour, by mutual agreement, to resolve the difficulties or to dispel the doubts to which the interpretation or application of the Convention may take place.
4. The competent authorities of the Contracting States shall agree on the administrative measures necessary for the implementation of the provisions of the Convention and in particular on the justifications to be provided by the residents of each Contracting State to benefit in the other State from the exemptions or tax reductions provided for in this Convention.
5. The competent authorities of the Contracting States shall communicate directly with each other for the purposes of the Convention.
Rule 25
ECHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange the information necessary to implement the provisions of this Convention or those of the domestic legislation of the Contracting States relating to the taxes covered by the Convention to the extent that the taxation it provides is not contrary to the Convention, in particular to prevent the fraud and escape of such taxes. The exchange of information is not restricted by section 1^er. The information received by a Contracting State shall be kept secret in the same manner as the information obtained under the domestic legislation of that State and shall only be communicated to the persons or authorities (including the courts and administrative bodies) concerned by the establishment or collection of the taxes referred to in the Convention, by the procedures or prosecutions relating to such taxes, or by the decisions on remedies relating to such taxes. These individuals or authorities only use this information for these purposes. They may report this information at public court hearings or in judgments.
2. The provisions of paragraph 1^er in no case may be construed as imposing on a Contracting State the obligation:
(a) take administrative measures derogating from its legislation, administrative practice or those of the other Contracting State;
(b) provide information that could not be obtained on the basis of its legislation or in the course of its normal administrative practice or those of the other Contracting State;
(c) provide information that would reveal a commercial, industrial, professional or commercial secret or information that would be contrary to public order.
Rule 26
ASSISTANCE TO RECOVER
1. Each Contracting State shall endeavour to recover on behalf of the other Contracting State any tax established by that other State and whose recovery is necessary for the benefit of the exemption or reduction of the tax rate granted by that other State under this Convention to be obtained by persons who are not entitled to it.
2. The provisions of this Article shall in no case be construed as imposing on the requested State the obligation to apply means of enforcement which are not authorized by the legal or regulatory provisions of either Contracting State or to take measures that would be contrary to public order.
Rule 27
LIMITATION OF EFFECTS OF THE CONVENTION
1. The provisions of this Convention shall not affect the tax privileges enjoyed by members of diplomatic missions or consular posts under either the general rules of the law of people or the provisions of special agreements.
2. The Convention does not apply to international organizations, their organs or officials, or to persons who are members of a diplomatic mission or consular post of a third State, where they are located in the territory of a Contracting State and are not treated in either Contracting State as residents in respect of income tax.
CHAPTER VI. - FINAL PROVISIONS
Rule 28
BACKGROUND
1. This Convention shall be approved by Belgium and Indonesia in accordance with their respective legal procedures and shall enter into force on the fifteenth day after the date of the exchange of notes announcing this approval.
2. The Convention will apply:
(a) taxes due to the source on income awarded or paid from 1^er January of the year immediately following that of the entry into force of the Convention;
(b) other taxes on taxable period income ending on or after December 31 of the year of entry into force of the Convention.
3. The Convention between the Kingdom of Belgium and the Republic of Indonesia to avoid double taxation and to prevent tax evasion in respect of income and property taxes, and the Protocol, signed in Brussels on 13 November 1973, shall cease to apply to any tax established for a period for which this Convention has effect with respect to that tax, in accordance with paragraph 2 of this Article.
Rule 29
DENONCIATION
This Convention shall remain in force until it has been denounced by a Contracting State; but each of the Contracting States may, until 30 June inclusive of any calendar year from the fifth year following that of the entry into force, denounce it, in writing and through diplomatic channels, to the other Contracting State. In case of denunciation before 1^er July of such a year, the Convention will cease to apply:
(a) taxes due to the source on the income awarded or paid by December 31 of the year of the denunciation;
(b) other taxes on taxable period income ending before 31 December of the same year.
In faith, the undersigned, duly authorized by their respective Governments, have signed this Convention and affixed their seals there.
Done in Djakarta on 16 September 1997, in duplicate, in the English language.
FOR THE GOVERNMENT OF THE BELGIUM ROYAUME:
FOR THE GOVERNMENT OF THE REPUBLIC INDONESIA:
PROTOCOLE
At the time of the signing of the Convention between the Kingdom of Belgium and the Republic of Indonesia to avoid double taxation and to prevent tax evasion in respect of income taxes, the undersigned agreed on the following provisions which are an integral part of the said Convention.
Ad article 7, paragraph 1^er :
It is understood that the profits derived by a company of a Contracting State in the other Contracting State from the sale of goods of an identical or similar nature to those sold through the permanent establishment located in that other Contracting State, or other commercial activities of an identical or similar nature to those carried out through that establishment, may be taxed in that other State, if the permanent establishment has contributed in any manner
In the belief that the undersigned duly authorized to do so by their respective Governments have signed and affixed the present Protocol.
Done in Djakarta on 16 September 1997, in duplicate, in the English language.
FOR THE GOVERNMENT OF THE BELGIUM ROYAUME:
FOR THE GOVERNMENT OF THE REPUBLIC INDONESIA: