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Indonesia - Tax Treaty Benefits, Revised Certificate of Domicile Rules

Indonesia - Tax Treaty Benefits, Revised Certificate

This report covers the recently revised Certificate of Domicile Rules in Indonesia and summarizes conditions and requirements in the new regulation.

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In 2017, the Director General of Taxation (DGT) issued regulation PER-08/PJ/2017 regarding the certificates of domicile for Indonesian tax residents (Surat Keterangan Domisili Bagi Subjek Pajak Dalam Negeri Indonesia - SKD SPDN). The new regulation revoked and replaced the former regulation PER-35/PJ/2010. 

WHY THIS MATTERS

Although most of the revisions are administrative, monthly tax returns and payments (if applicable) must be current to obtain approval and a separate certificate of domicile (COD) is required for each country.  Dual resident expatriate employees should apply for this COD to secure this exemption from tax in the other country. 

Background

Indonesia has entered into a double taxation treaty with 63 countries, which generally regulates the taxing right of the source country. Obtaining a Certificate of Domicile (COD) from the Indonesian Tax Authorities will allow Indonesian resident taxpayers to claim tax treaty benefits in the corresponding country where they are also subject to tax. For example, a taxpayer who qualifies for dual tax residency may need a COD from Indonesia to help ensure that his Indonesian salary is only subject to income tax in Indonesia and is not subject to double taxation in the other country of residence.

PER-08/PJ/2017 Summary

Under this regulation, a resident taxpayer may request a COD to be issued for the following: 

Tax Year/Period Timing when COD is submitted Condition for approval
Current tax year Anytime during the year The latest Article 25 monthly tax return due has been submitted (if applicable) 
Previous tax years Before annual tax return date The latest Article 25 monthly tax return due has been submitted (if applicable)
Before extended return due dateA request for extension to file the annual tax return has been submitted A request for extension to file the annual tax return has been submitted
After annual or extended tax return due date The annual tax return for the relevant year has been submitted

 

Other conditions and requirements in the new regulation are as follows:

Details OLDBased on PER-35/PJ/2010  NEWBased on PER-08/PJ/2017
Form name Form – DGT 6 Form SKD SPDN
Submission format Hard copy Hard copy and soft copy
Indonesian Tax Identification Number Required Required
Number of countries where treaty benefit will be applied One COD could be used for several countries A different COD must be used for each country
COD tax year and tax period Not required Required
Offshore counterpart information Not required

- Name

- Tax identification number

- Transaction value in foreign currency and IDR

Request to utilize special form from the corresponding country’s tax authority Not regulated Regulated and available
Processing time 5 days 10 days
Validity  12 months from the date of issuance 12 months from the date of issuance

 

The information contained in this newsletter was submitted by the KPMG International member firm in Indonesia.

© 2018 PT KPMG Advisory Indonesia, an Indonesian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in 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.

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