Indonesia-Singapore Sign Double Tax Avoidance Agreement

Bogor, MINA – The Minister of Finance of the Republic of Indonesia, Sri Mulyani Indrawati and the Minister of Finance of Singapore signed the Double Tax Avoidance Agreement or P3B.

The signing was witnessed by President Joko Widodo and Singapore President Halimah Yacob at the Bogor Presidential Palace, West Java on Tuesday, February 4.

“This is an agreement that has been regulated through the P3B or the Double Tax Avoidance Agreement that occurred in 1990 and took effect in 1992,” said the Minister in her press statement.

Since 2015, according to the Indonesian Minister of Finance, President Jokowi asked the Prime Minister of Singapore to conduct a review for a very long P3B, which no longer captures the conditions that are currently happening.

The things agreed in the new P3B, according to the Minister of Finance, were the royalty tax rate was reduced to two layers, namely 10 percent and 8 percent.

“Then, the second branch profit tax rate was reduced from 15 to 10, both of these matters for royalties and the branch profit tax which was down is consistent with many P3Bs that have been signed by the Republic of Indonesia with partner countries,” added the minister.

In this case, continued the Minister of Finance, Singapore wants to be treated the same as other countries and with this decline, the Indonesian Government hopes that investment from Singapore will be even higher.

Furthermore, the minister said that Indonesia got positive results from the elimination of Clausula’s most favored nation in contract production sharing arrangements and also more explicit arrangements regarding tax avoidance, anti-tax avoidance, and capital gains, and exchange of information in accordance with international standards.

“Thus, Indonesia will get more measurements that can be done to occur or to combat the occurrence of tax avoidance usually by our companies which then use Singapore as its base,” she said. (T/RE1)

Mi’raj News Agency (MINA)