Indonesia: Ratification of tax treaties with UAE and with Singapore

Income tax treaties with UAE and with Singapore have been ratified

Income tax treaties with UAE and with Singapore have been ratified

Income tax treaties between Indonesia and the United Arab Emirates and between Indonesia and Singapore have been ratified pursuant to the ratification procedures in Indonesia.

UAE treaty

With regard to the income tax treaty with the UAE, certain provisions are consistent with those of the existing income tax treaty, such as withholding tax rates for dividends at 10% and for royalties at 5%. However, the new treaty reflects an increase in the rate of withholding tax on interest to 7% (increased from 5%).

The income tax treaty also includes several new provisions such as:

  • An exemption from tax on dividends paid to the government
  • A withholding tax rate of 5% on compensation of technical services
  • A right to levy tax on income from hydrocarbons in the country of source

In addition, there are amendments to adopt provisions related to the Multilateral Instrument (MLI) including an extension of the definition of permanent establishment; an exemption of capital gains on transfer of shares with less than 50% of immovable property; a conversion of the exchange of information to the 2017 OECD Model; and the introduction of the “principal purpose test.”

Treaty with Singapore

The new income tax treaty with Singapore also reflects changes to the withholding tax rates. For instance, the withholding tax rate on royalties is reduced to 10% or 8% (from 15%) depending on the type of royalty payment.

Another change reflects a reduced branch profit tax rate of 10% (reduced from 15%).

The new treaty also addresses the tax treatment of capital gains.

Read a September 2021 report [PDF 302 KB] prepared by the KPMG member firm in Singapore


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 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.