Subject to certain restrictions (e.B provisions of the DTA), a credit is granted for taxes paid or due abroad in relation to income earned or accumulated abroad. Proof of tax paid abroad must be attached to the tax return to prove the tax credit claimed. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that acts as a coordinating body for a network of independent member firms. KPMG International does not provide audit or other client services. These services are provided exclusively by member firms in their respective geographical areas. KPMG International and its member firms are legally distinct and distinct entities. They are not, and nothing herein, should be construed as placing such entities in the relationship of parent companies, subsidiaries, agents, partners or joint ventures. No member firm has the power (real, obvious, implied or otherwise) to bind kpmg International or any member firm in any way. The information contained herein is of a general nature and is not intended to respond to the situation of any particular person or entity. While we strive to provide accurate and timely information, there can be no assurance that such information will be accurate at the time of receipt or that it will continue to be accurate in the future. No one should act on the basis of such information without the advice of an appropriate professional after a thorough examination of the situation in question.

For more information, contact KPMG`s Federal Tax Legislative and Regulatory Services Group at:+1 202 533 4366, 1801 K Street NW, Washington, DC 20006. The DTA provided for relief from double taxation if the income was subject to tax in both Contracting States. In the case of Indonesia, Singapore`s tax due on Singapore`s income is granted in the form of a credit to Indonesian tax due on that income. Indonesian tax due on income from Indonesia is recorded as a credit on Singapore tax due on such income. The credit thus granted may not exceed the tax of the respective country calculated before the credit. The above changes may affect relevant industry players (e.B. banks and professional agents) by imposing various obligations to comply with the new provisions on the exchange of information under the updated DTA and CRS. Let our experienced team help you manage your accounting, tax and payroll issues. The profits of a company of a Contracting State may be taxed only in that State, unless the company carries on business in the other Contracting State through a permanent establishment established therein. However, only that part of the profit which is actually attributable to the PE may be taxed in the other Contracting State. For the purposes of determining the profits of the PE, all expenses and deductions that could reasonably be attributed to the PE and deductible if the PE were an independent undertaking shall be permitted and the profits of the PE shall be determined as if it were an independent and distinct undertaking carrying on the same or similar activities under the same or similar conditions and acting independently with the undertaking; of which it is an EP. The mere purchase of goods or merchandise for the business by an MOU does not result in any profits attributable to that MOU.

The allocation of profits to pe must be made annually using the same method, unless there is a valid reason to the contrary. If insufficient information is available to the competent authority, the provisions of the Agreement shall not affect the law of the State Party or the discretion of the competent authority. Students and trainees who, immediately before their visit to the other Contracting State in which they are undergoing training, resided in a Contracting State and who reside temporarily in the other Contracting State solely for the purposes of education or training shall be exempt from tax in the other State. Tax in the other State is exempt from all remittances and grants from abroad, as well as from any compensation not exceeding $2,200 per annum for services in that other State, provided that the services are provided in the course of its studies, research or studies or are necessary for its maintenance. For example, in accordance with the MLI, the preamble to the DTA had been amended so that the Commission`s objective was to eliminate double taxation “without creating opportunities for non-taxation or tax reduction through tax evasion or avoidance (including through contractual agreements aimed at obtaining facilities provided for in this Agreement for the indirect benefit of residents of third-country nationals)”. WFP was not a new concept in the existing Commission, and it could even be said that WFP was ahead of its time when it was originally introduced as a provision in the 1992 Commission. Nevertheless, the wording of Article 25 has been slightly adapted to align it with the OECD and MI model. The country emerged largely unscathed from the global economic crisis, which left a gap in several regional economies. Indonesia`s rich natural resources remain the main pulling force of international conglomerates; However, the situation is gradually changing, with a focus on Indonesian consumers. Foreign direct investment is estimated to have increased by 27% in the first quarter of 2013 to a record high of Rs 65.5 trillion, or nearly S$7 billion. Large population, young workers and a growing middle class are attracting investment to Indonesia. The Boston Consulting Group recently predicted that Indonesia`s middle class and affluent consumers would double to 141 million by 2020.

More importantly, the country`s unit labor costs are much lower than conventional destinations such as China, India, or Vietnam, which, along with the recent easing of the licensing process and the government`s efforts to reduce bureaucracy, will improve the country`s competitiveness in the manufacturing sector. Indonesia is becoming an important investment destination in the region. One of the most important innovations was the introduction of article 13 in the updated DTA, which provided for the taxation of capital gains. Article 13 is broadly in line with the 2017 OECD Model Convention (OECD Model). Income received by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State. Income from the immovable property of a business and income from immovable property used for the provision of independent personal services are also covered by this provision. Income from the direct use, rental or use in any other form of real estate is covered by the agreement. The term “immovable property” includes immovable property within the meaning of the law of the Contracting State in which the immovable property is situated. It includes accessories, equipment, livestock, rights and usufruct rights on immovable property, as well as rights to variable or fixed payments in return for the management of mineral deposits, springs and other natural resources or the right to work. However, ships and aircraft are not considered real estate. Singapore and Indonesia are signatories to the Multilateral Competent Authority Agreement (MCAA), a multilateral framework agreement for the implementation of the Common Reporting Standard (CRS). The CRS represents an important step in the global exchange of information by introducing a single global standard for the automatic exchange of financial account information between more than 100 participating countries.

On the other hand, the leasing of equipment (e.B, the leasing of aircraft) would generally fall under category (b) above and would therefore be subject to a maximum withholding tax rate of 8%. Singapore`s domestic tax system is in itself a very attractive feature for international investors. With its tax-friendly policies such as exemption of foreign dividends, exemption of certain foreign income, no withholding tax on dividends paid to non-residents, and no capital gains tax, Singapore is undoubtedly the most attractive global business hub and the most sought-after jurisdiction for holding companies….

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