Double Tax Agreement Singapore Indonesia

Income received by a Member State established in a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State. Income from the fixed assets of an enterprise and the income of immobile persons used for the provision of independent personal life services are also covered by this provision. Income from the direct use, rental or other use of immovable property is the subject of the contract. The term “immovable property” means immovable property within the meaning of the law of the Contracting State in which the property is located. It includes accessories, equipment, livestock, rights and usufruct rights of fixed assets, as well as rights to variable or fixed payments in return for the exploitation of mineral deposits, sources and other natural resources or the right to work. However, ships and aircraft are not considered immovable property. Capital gains were not regulated by the old DBA agreement. The provision has been added to the new DBA and will be amended in accordance with the Organisation for Economic Co-operation and Development (OECD) model. Both countries apply the imputation method to eliminate double taxation. Singapore also grants a credit for Indonesian tax paid on profits on which dividends are paid by a company established in Indonesia to a company established in Singapore, provided that the Singapore company holds, directly or indirectly, at least 10% of the share capital of the paying company. The country has remained largely unscathed by the global economic crisis, which has left a hole in several regional economies.

Indonesia`s abundant natural resources remain the main driving force of international conglomerates; However, the situation is gradually changing, with a focus on Indonesian consumers. According to reports, foreign direct investment increased by 27% in the first quarter of 2013 to a record 65.5 trillion rupiah, or nearly $7 billion. Large population, young labour and a growing middle class are settling in Indonesia. The Boston Consulting Group recently predicted that Indonesia`s middle class and wealthy consumers would double to 141 million by 2020. Most importantly, the country`s unit labour costs are much lower than traditional destinations such as China, India or Vietnam, which, combined with the recent relaxation of the licensing process and the government`s efforts to reduce bureaucracy, will improve the country`s competitiveness in manufacturing. Indonesia is becoming an important investment target in the region….

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