On 21 November 2018, Indonesia’s Director General of Taxation issued DGT Regulation No. 25/PJ/2018 (PER-25) revising the country’s anti-tax treaty abuse rules.
PER-25 is effective as of 1 January 2019.
PER-25 is intended to simplify the administrative procedures for a nonresident to obtain treaty relief. However, it also contains some changes to the tests to be met by nonresidents receiving Indonesian source income, which may create uncertainties in application of the rules in some cases. Failure to comply with the conditions would mean treaty protection cannot apply – for example dividends, services, interest and royalties, would be subject to the 20% statutory withholding tax.
