An updated tax treaty between Singapore and Indonesia entered into force on July 23. The new agreement, which was signed in February 2020, replaces the one in effect since 1992.
The new treaty lowers withholding tax rates for royalties and branch profits and exempts certain capital gains from source country taxation. It also adopts international standards for combating tax treaty abuse.
Under the updated treaty, withholding tax on royalties is limited to 10% for certain royalties relating to copyrights, patents, trademarks, and certain other uses, and 8% for royalties relating to the use of certain equipment or information. Under the previous treaty, a 15% rate applied.
Withholding rates for interest (10%) and dividends (10% or 15%) remain unchanged.
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