Malaysia (Malaysia)
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDONESIA AND THE GOVERNMENT OF MALAYSIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME Article 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contacting States. Article 2 TAXES COVERED This Agreement shall apply to taxes on income imposed by a Contracting State, irrespective of the manner in which they are levied. The taxes, which are the subject of this Agreement are: (a) in lndonesia, the income tax (paiak penghasilan); (hereinafter referred to as “Indonesian tax”). (b) In Malaysia: (i) the income tax and excess profit tax; (ii) the supplementary income tax, that is, development and (iii) the petroleum income tax; (hereinafter referred to as “Malaysian tax”). This Agreement shall also apply to any identical or substantially similar taxes on income which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of important changes which have been made in their respective taxation laws. Article 3 GENERAL DEFINITIONS For the purposes of this Agreement, unless the context otherwise requires: (a) the term “Indonesia” comprises the territory of the Republic of Indonesia as defined in its laws, and parts of the Continental Shelf and adjacent seas, over which the Republic of Indonesia has sovereignty, sovereign rights or other rights in accordance with international law; (b) the term “Malaysia” means the Federation of Malaysia and includes any area adjacent to the territorial waters of Malaysia which, in accordance with international law, has been or may hereafter be designated under the laws of Malaysia concerning the Continental Shelf as an area within which the rights of Malaysia with respect to the exploration and exploitation of natural resources, whether living or non- living, of the seabed and subsoil and the superjacent waters, may be exercised; (c) the terms “a Contracting State” and “the other Contracting State” mean Malaysia or Indonesia as the context requires; (d) the term “tax” means Malaysian tax or Indonesian tax, as the context requires; (e) the term “person” includes an inpidual, a company and any other body of persons which is treated as an entity for tax purposes; (f) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes; (g) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (h) the term “national” means: (i) any inpidual possessing the citizenship or nationality of a Contracting State; (ii) any legal person, partnership, association and any other entity deriving its status as such from the laws in force in a Contracting State; (i) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; (j) the term “competent authority” means: (i) in the case of Malaysia, the Minister of Finance or his authorized representative; (ii) in the case of Indonesia, the Minister of Finance or his authorized representative. In the application of the Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State concerning the taxes to which the Agreement applies. Article 4 RESIDENT For the purposes of this Agreement, the term “resident of a Contracting State” means: (a) in the case of Malaysia, a person who is resident in Malaysia for the purposes of Malaysian tax; and (b) in the case of Indonesia, a person who is resident in Indonesia for the purposes of Indonesian tax. Where by reason of the provisions of paragraph 1 an inpidual is a resident of both Contracting States, then his status shall be determined as follows; (a) he shall be deemed to be a resident of the State in which he has a permanent home available to him. If he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; (c) if he has an habitual abode in both States or in neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. Where, by reason of paragraph 1, a person other than an inpidual is a resident of both Contracting States, the competent authorities of the Contracting States shall by mutual agreement endeavour to settle the question having regard to its day-to-day management, the place where it is incorporated or otherwise constituted and any other relevant factors. Article 5 PERMANENT ESTABLISHMENT For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of the enterprise is wholly or partly carried on. The term “permanent establishment” shall include especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil of gas well, a quarry or other place of extraction of natural resources including timber or other forest produce; (g) a farm or plantation; (h) a building site or construction, installation or assembly protect which exists for more than 6 months; (i) the furnishing of services, including consultancy services, by an enterprise through an employee or other person (other than an agent of