Indonesia / Timor-Leste

This Convention applies to persons resident in one or both Contracting States.

1. This Convention applies to income and property taxes payable by each of the Contracting States, or their political subdivisions or local entities, whatever the system of their levy.

2. Taxes on income and property are those which tax the entire income or property or any part thereof, including taxes on earnings arising from the disposal of movable or immovable property, taxes on the amount of wages or salaries paid by enterprises, as well as taxes on capital gains.

3. The current taxes to which this Convention specifically applies are:

(a) In Spain:

(i) Personal Income Tax;

(ii) corporation tax;

(iii) Property Tax;

(iv) local taxes on income and wealth (hereinafter referred to as the Spanish tax).

(b) In Indonesia:

(i) the income tax established by the Undang Undang Pajak Penghasilan 1984 (Act No. 7 of 1983), and to the extent provided for in that income tax law, the corporation tax established by the Ordonansi Pajak Perseroan 1925 (‘State Gazette’ No. 319, 1925, as amended by Act No. 8 of 1970), and the Tax on Interests, Dividends and royalties, established by the Undang Undang Pajak atas Bunga, Dividen dan Royalty 1970 (Act No. 10 of 1970);

(ii) the capital tax established by Undang-undang Pajak Bumi dan Bangunan (Law No 12, 1985) (hereinafter referred to as the Indonesian tax).

4. The Convention shall also apply to taxes on income and property of an identical or similar nature which are established after the date of signature of the Convention and which are added to or replaced by those referred to in paragraph 3. The competent authorities of the Contracting States shall communicate any substantive changes made to their respective tax laws.

1. For the purposes of this Convention, unless the context of the Convention is different:

(a) (i) the term ‘Spain’ refers to the Spanish State and, when used geographically, to the territory of the Spanish State, including any area adjacent to territorial waters in which, in accordance with international law and in accordance with its domestic law, the Spanish State may exercise rights of jurisdiction or sovereignty over marine soil, subsoil and superjacent waters, and their natural resources;

(ii) the term ‘Indonesia’ includes the territory of the Republic of Indonesia, as defined in its legislation, as well as adjacent waters over which the Republic of Indonesia has rights of jurisdiction or sovereignty, as provided for in the 1982 United Nations Convention on the Law of the Sea;

(b) the words ‘one Contracting State’ and ‘the other Contracting State’ mean Spain or Indonesia, depending on the context;

(c) the term ‘person’ means natural persons, companies and any other grouping of persons;

(d) the term 'company' means any legal person or any entity which is considered a legal person for tax purposes;

(e) the words 'undertaking of one Contracting State' and 'undertaking of the other Contracting State' mean, respectively, an undertaking operated by a resident of one Contracting State and an undertaking operated by a resident of the other Contracting State;

(f) 'international traffic' means any transport carried out by a ship or aircraft operated by an undertaking of a Contracting State, except where the operation of the ship or aircraft is limited to points situated in the other Contracting State;

(g) the term ‘competent authority’ means:

(i) in Spain: the Minister of Economy and Finance or his authorized representative;

(ii) In Indonesia: the Minister of Finance or his authorized representative;

(h) the term 'national' means:

(i) any natural person possessing the nationality of a Contracting State;

(ii) any legal person, partnership or association established under the law in force in a Contracting State.

2. For the purposes of the application of the Convention by a Contracting State, any expression not defined in the Convention shall have, unless its context indicates a different interpretation, the meaning attributed to it by the law of that Contracting State concerning taxes which are the subject of the Convention.

1. For the purposes of this Convention, the term ‘resident of a Contracting State’ means any person who, under the law of that State, is subject to taxation in that State by reason of his domicile, residence, address or any other criterion of a similar nature.

2. Where, under the provisions of paragraph 1, a natural person is resident in both Contracting States, his or her situation shall be resolved as follows:

(a) Such person shall be considered a resident of the State where he or she has permanent housing at his or her disposal; if he or she has permanent housing at his or her disposal in both States, he or she shall be considered a resident of the State with which he or she has closer personal and economic relations (centre of vital interests);

(b) if the State in which the person has the centre of his or her vital interests cannot be determined, or if he or she does not have permanent housing at his or her disposal in any of the States, he or she shall be considered a resident of the Contracting State in which he or she habitually lives;

(c) if he or she is habitually resident in both States or does not live in either State, the competent authorities of the Contracting States shall decide the case by mutual agreement.

3. Where under the provisions of paragraph 1 a person other than a natural person is a resident of both Contracting States, he shall be considered a resident of the State in which his place of effective management is located.

1. For the purposes of this Agreement, the term ‘permanent establishment’ means a fixed place of business through which an undertaking carries out all or part of its activity.

2. The term ‘permanent establishment’ includes, in particular:

(a) the head offices;

(b) branches;

(c) Offices;

(d) factories;

(e) Workshops;

(f) mines, oil or gas wells, quarries or any other place of extraction of natural resources.

3. The term ‘permanent establishment’ shall also include:

(a) a construction site, installation or assembly project or monitoring activities relating thereto, but only where such works, projects or activities last for more than one hundred and eighty-three days;

(b) the provision of services by an enterprise, including consultancy, through its employees or other personnel engaged by the enterprise for that purpose, but only in the event that such activities take place within the country (for the same project or related projects) for a total period or periods exceeding three months with reference to any twelve-month period.

4. By way of derogation from the provisions of this Article, the expression ‘permanent establishment’ shall be deemed not to include:

(a) the use of facilities for the sole purpose of storing or displaying goods or goods belonging to the undertaking;

(b) the maintenance of a warehouse of goods or goods belonging to the undertaking for the sole purpose of storing, displaying or delivering them;

(c) the maintenance of a deposit of goods or goods belonging to the undertaking for the sole purpose of processing by another undertaking;

(d) the maintenance of a fixed place of business for the sole purpose of purchasing goods or goods or collecting information for the undertaking;

(e) the maintenance of a fixed place of business for the sole purpose of advertising, providing information, carrying out scientific research or similar preparatory or auxiliary activities for the undertaking;

(f) maintenance of a fixed place of business only for the combined exercise of the activities referred to in points (a) to (e), provided that the joint activity of the fixed place of business retains its auxiliary or preparatory character.

5. By way of derogation from paragraphs 1 and 2, where a person, other than an agent enjoying an independent status to which paragraph 7 applies, acts in a Contracting State on behalf of an undertaking of the other Contracting State, that undertaking shall be deemed to have a permanent establishment in the Contracting State referred to above in respect of any activities undertaken by that person for the undertaking, if that person:

(a) habitually holds and exercises powers in that State to conclude contracts on behalf of the undertaking, unless the activities of that person are limited to those referred to in paragraph 4 and if they have been carried out through a fixed place of business, they have not determined the consideration of that fixed place of business as a permanent establishment in accordance with the provisions of that paragraph; or

(b) without having such powers, it regularly maintains in the State referred to above a deposit of goods or goods from which it makes regular deliveries on behalf of the undertaking.

6. Except as regards reinsurance, an insurance undertaking in one Contracting State shall be considered to have a permanent establishment in the other Contracting State if it receives premiums in that other State or if it ensures risks located in that State through an employee or representative other than an agent enjoying an independent status within the meaning of paragraph 7.

7. An enterprise of one Contracting State shall not be considered to have a permanent establishment in the other Contracting State merely because it carries out activities in that other State through a broker, a general commissioner or any other agent enjoying an independent status, provided that such persons act within the ordinary framework of their activity. However, where the activities of such agents are carried out exclusively, or almost exclusively, on behalf of that undertaking, they shall not be deemed to enjoy an independent status for the purposes of this paragraph.

8. The fact that a company resident of a Contracting State controls or is controlled by a company resident of the other Contracting State, or that it carries out activities in that other State (whether through a permanent establishment or otherwise), does not in itself make any of those companies permanent establishment of the other State.

1. Income from immovable property (including income from agricultural or forestry holdings) situated in the other Contracting State may be taxed in that other Contracting State.

2. The term ‘real property’ shall have the meaning attributed to it by the law of the Contracting State in which the property is situated. In any event, that term includes accessories, livestock and equipment used on agricultural and forestry holdings, rights to which the provisions of private law relating to real estate, the use of immovable property and rights to variable or fixed payments for the exploitation or concession of the exploitation of mineral deposits, sources and other natural resources apply; vessels, vessels and aircraft are not regarded as immovable property.

3. The provisions of paragraph 1 apply to income derived from direct use, lease or shareholding, as well as from any other form of exploitation of immovable property.

4. The provisions of paragraphs 1 and 3 also apply to income derived from the real estate of an undertaking and from those used for the provision of independent personal services.

1. The profits of an undertaking in a Contracting State may be taxed only in that State unless the undertaking carries out its business in the other Contracting State through a permanent establishment situated therein. (b) sales of goods or goods identical or similar to those sold through that permanent establishment, carried out in that other State;

2. Without prejudice to the provisions of paragraph 3, where an undertaking of one Contracting State engages in activities in the other Contracting State by means of a permanent establishment situated therein, in each Contracting State the profits it could have obtained from being a separate and separate undertaking carrying out the same or similar activities under the same or similar conditions shall be attributed to that establishment and shall deal entirely independently with the undertaking from which it is a permanent establishment.

3. In order to determine the benefit of the permanent establishment, the deduction of expenses incurred for the realization of the purposes of the permanent establishment, including management and general administrative expenses for the same purposes, shall be permitted, whether incurred in the State in which the permanent establishment is located or elsewhere. However, payments (other than reimbursement of actual expenses) made by the permanent establishment to the head office of the undertaking or to another of its branches by way of fees, fees or similar payments for the use of patents or other rights, or by way of commissions for the provision of specific services or management services, or, except for a banking institution, by way of interest on amounts provided to the permanent establishment, shall not be deductible. Similarly, the amounts (other than those constituting reimbursement of actual costs) charged by the permanent establishment to the head office of the undertaking or to another of its branches for fees, fees or other duties, or for commissions for the provision of specific services or for management services, or, except for a banking institution, for interest on amounts provided to the head office of the undertaking or to another of its branches, shall not be taken into account in determining the benefit of the permanent establishment.

4. No profits shall be attributed to a permanent establishment on the sole ground of the purchase by that permanent establishment of goods or goods for the undertaking.

5. Where profits include income covered separately by other articles of this Convention, the provisions of those articles shall not be affected by those of this Article.

1. The profits of operating ships or aircraft in international traffic by an undertaking of a Contracting State may be taxed only in that State.

2. The provisions of paragraph 1 also apply to profits from participation in a pool, in a joint venture or in an international operating body.

When:

(a) an undertaking of a Contracting State participates, directly or indirectly, in the direction, control or capital of an undertaking of the other Contracting State; or

(b) the same persons participate, directly or indirectly, in the direction, control or capital of an undertaking of a Contracting State and of an undertaking of the other Contracting State,

and in either case the two companies are, in their commercial or financial relations, bound by accepted or imposed conditions that differ from those that would be agreed by independent undertakings, the profits that would have been obtained by one of the companies in the absence of these conditions, and which in fact have not occurred because of them, may be included in the profits of that undertaking and subject to taxation accordingly.

1. Dividends paid by a company resident of one Contracting State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State in which the company paying the dividends resides and in accordance with the law of that State, but if the recipient of the dividends is its beneficial owner, the tax thus required may not exceed:

(a) 10 per cent of the gross amount of dividends if the beneficial owner is a company that owns at least 25 per cent of the capital of the company that pays the dividends directly;

(b) 15 per 100 of the gross amount of dividends in the remaining cases.

The competent authorities of the Contracting States shall, by mutual agreement, determine how these limits are to be applied.

The provisions of this paragraph do not affect the company's taxation of profits from which dividends are paid.

3. The term ‘dividends’ used in this Article means the income from shares or other rights, except credit rights, which allow participation in profits, as well as the income from other social shares subject to the same tax regime as the income from shares under the legislation of the State in which the company distributing them resides.

4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the dividends, resident of one Contracting State, carries out in the other Contracting State, of which the company that pays the dividends is resident, an industrial or commercial activity through a permanent establishment located in that other State, or provides independent personal services through a fixed base situated therein, and the share generated by the dividends is effectively linked to those permanent establishment or fixed base. In such cases, the provisions of article 7 or article 14 apply, as appropriate.

5. Where a company resident of one Contracting State obtains profits or income from the other Contracting State, that other State may not require any tax on dividends paid by the company, unless such dividends are paid to a resident of that other State or the share generated by the dividends is effectively linked to a permanent establishment or a fixed base situated in that other State, or subject the undistributed profits of the company to a tax on them, even if the dividends paid or profits not distributed consist, in whole or in part, of profits or income from that other State.

6. Notwithstanding the other provisions of this Convention, where a company resident of one Contracting State has a permanent establishment in the other Contracting State, the profits of the permanent establishment may be subject to an additional tax in that other State in accordance with its law, but such additional tax may not exceed 10 per cent of the profits after deduction of income tax and other income taxes which they levy in that other State.

7. The provisions of paragraph 6 of this Article shall not affect the content of production participation contracts and operating contracts (or other similar contracts) relating to the oil and gas sectors or other extractive sectors, concluded until 31 December 1983, including by the Government of Indonesia, or its institutional agents, the relevant State oil or gas company, or another of its entities, with a person resident in Spain.

1. Interest from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State from which it comes and in accordance with the law of that State, but if the recipient of the interest is its beneficial owner, the tax thus required may not exceed 10 per cent of the gross amount of interest.

The competent authorities of the Contracting States shall, by mutual agreement, determine how to apply this limit.

3. By way of derogation from paragraph 2, the interests accruing from a Contracting State and received by the other Contracting State, including its political subdivisions and local entities, the Central Bank or a financial institution controlled by that State or by one of its political subdivisions or local entities, shall be exempt from taxation in the State first mentioned.

4. The term ‘interest’ used in this Article means the income from claims of any kind, with or without mortgage guarantee or benefit-sharing clause of the debtor, and in particular income from public funds and bonds or bonds, including premiums and lots attached to such securities, as well as any other income derived from the tax legislation of the State from which they are derived from income from the amounts lent, including interest on sales with deferred payment.

5. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the interest, resident of one Contracting State, carries out in the other Contracting State, from which the interest is derived, an industrial or commercial activity through a permanent establishment located in that other State or provides independent personal services through a fixed base situated therein, and the credit generated by the interest is effectively linked to: (a) that permanent establishment or fixed base, or (b) the activities referred to in Article 7(1)(c). In such cases, the provisions of Article 7 or Article 14 shall apply as appropriate.

6. Interest is considered to come from a Contracting State where the debtor is the State itself, a political subdivision, a local entity or a resident of that State. However, where the debtor of interest, whether or not resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed basis in respect of which the debt giving rise to the payment of the interest and bearing the burden of the interest has been incurred, the interest shall be deemed to have originated from the Contracting State where the permanent establishment or fixed base is situated.

7. Where, by reason of the special relations between the debtor and the beneficial owner of the interest, or of which both have with third parties, the amount of interest paid, taking into account the claim for which it is paid, exceeds that agreed by the debtor and the creditor in the absence of such relations, the provisions of this article shall apply only to the latter amount. In such a case, the excess may be imposed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.

1. Fees from one Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such fees may also be subject to taxation in the Contracting State from which they come, and in accordance with the law of that State, but if the recipient of the fees is its beneficial owner, the tax thus required may not exceed 10 per cent of the gross amount of the fees.

The competent authorities of the Contracting States shall, by mutual agreement, determine how to apply this limit.

3. The term ‘royalties’ used in this Article means the amounts of any kind paid for the use or granting of a copyright on a literary, artistic or scientific work, including cinematographic films and films or tapes for radio or television, a patent, trademark or trade mark, design, plan, formula or secret procedure, as well as for the use or granting of use of industrial, commercial or scientific equipment, and for information relating to industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the royalties, resident of a Contracting State, carries out an industrial or commercial activity in the other Contracting State from which the royalties come by means of a permanent establishment located in that other State or provides independent personal services by means of a fixed base situated in that State, and the right or property for which the royalties are paid is effectively linked to: (a) that permanent establishment or fixed base, or (b) the business activities referred to in Article 7(1)(c). In such cases, the provisions of article 7 or article 14, as appropriate, apply.

5. The royalties are considered to come from a Contracting State where the debtor is the State itself, a political subdivision, a local entity or a resident of that State. However, where the debtor of the royalties, whether or not he is resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed basis in respect of which an obligation has been entered into to pay the royalties, and that permanent establishment or fixed base bears the burden of those royalties, they are considered to be from the Contracting State where the permanent establishment or fixed base is situated.

6. Where, on account of the special relations between the debtor and the beneficial owner, or of those between them and third parties, the amount of the fees paid, having regard to the benefit for which they are paid, exceeds that agreed by the debtor and the beneficial owner in the absence of such relationships, the provisions of this article shall apply only to the latter amount. In such a case, the excess may be taxed in accordance with the law of each Contracting State, taking into account the other provisions of this Convention.

1. Profits that a resident of one Contracting State obtains from the disposal of immovable property, as defined in article 6, located in the other Contracting State, may be taxed in that other State.

2. Gains from the disposal of movable property forming part of the assets of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or from movable property belonging to a fixed basis held by a resident of one Contracting State in the other Contracting State for the provision of independent personal services, including gains from the disposal of that permanent establishment (only or with the enterprise as a whole) or from that fixed basis, may be taxed in that other State.

3. Profits derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic, or from movable property affected by the operation of such vessels or aircraft, may only be taxed in that State.

4. Profits arising from the disposal of any property other than those referred to in the preceding paragraphs may be taxed only in the Contracting State in which the transferor resides.

1. Incomes which a resident of a Contracting State obtains from the provision of professional services or other activities of an independent nature may only be taxed in that State, unless such resident normally has a fixed basis in the other Contracting State for the pursuit of his or her activity or remains in that other State for a period or periods exceeding a total of 90 days within any period of twelve months. If it has such a fixed base or remains in that other State during the said period or periods, the income may be taxed in that other State, but only to the extent that it is attributable to that fixed base or obtained in that other State during that period or periods.

2. The term "professional services" includes, in particular, independent scientific, literary, artistic, educational or pedagogical activities, as well as independent activities of doctors, lawyers, engineers, architects, dentists and accountants.

1. Without prejudice to Articles 16, 18, 19, 20 and 21, similar salaries, wages and salaries obtained by a resident of a Contracting State on account of employment may be subject to taxation only in that State, unless the employment is exercised in the other Contracting State. If the employment is exercised in this way, the remuneration received in this way may be subject to taxation in that other State.

2. By way of derogation from paragraph 1, remuneration obtained by a resident of a Contracting State on the basis of employment in the other Contracting State may be taxed only in the State referred to above if:

(a) The recipient does not remain in total in the other State, for one or more periods, more than one hundred and eighty-three days within any period of twelve months;

(b) remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

(c) Remuneration is not borne by a permanent establishment or a fixed basis which the employer has in the other State.

3. Notwithstanding the foregoing provisions of this Article, remunerations earned by employment on board a ship or aircraft operated in international traffic by an undertaking of a Contracting State may be subject to taxation in that State.

Participations, attendance allowances and other similar remunerations which a resident of a Contracting State obtains as a member of a Board of Directors or Supervisory Board, or any other body with similar functions, from a company resident of the other Contracting State may be taxed in that other State.

1. Notwithstanding the provisions of Articles 14 and 15, any income earned by a resident of a Contracting State as a spectacle professional, theatre, film, radio or television actor, or musician, or as an athlete, resulting from the exercise of his personal activity in that capacity in the other Contracting State, may be subject to taxation in that other State.

2. Notwithstanding the provisions of Articles 7, 14 and 15, where the income derived from the activities carried out by an artist or athlete, personally and in that capacity, is attributed, not to the artist or athlete himself, but to another person, such income may be taxed in the Contracting State in which the activities of the artist or athlete are carried out.

3. By way of derogation from paragraphs 1 and 2, income derived from the activities referred to in paragraph 1 carried out under a cultural treaty or agreement between the Contracting States shall be exempt from taxation in the Contracting State in which the activities take place if the visit to that State is financed, in whole or in part, by funds of the other Contracting State, or by a political subdivision, local entity or a public institution thereof.

1. Without prejudice to Article 19(2), pensions and similar remuneration paid to a resident of a Contracting State on account of previous employment may only be taxed in that State.

2. By way of derogation from paragraph 1, pensions paid by a pension fund recognised by the Government, as well as other payments made under a public system forming part of the social security of a Contracting State or of one of its political subdivisions or local authorities, may only be subject to taxation in that State.

1. (a) Remuneration, excluding pensions, paid by a Contracting State or one of its political subdivisions or local entities to a natural person for services rendered to that State or subdivision or entity, may be subject to taxation only in that State.

(b) However, such remuneration may be subject to taxation in the other Contracting State only if the services are provided in that State and the natural person is a resident of that State who:

(i) possesses the nationality of this State; or

(ii) has not acquired the resident status of that State only for the purpose of providing services.

2. (a) Pensions paid by a Contracting State or by one of its political subdivisions or local entities, either directly or from funds made up of them, to a natural person on account of services rendered to that State or to that subdivision or entity, may only be subject to taxation in that State.

(b) However, such pensions may be subject to taxation in the other Contracting State only if the natural person is a resident and a national of that State.

3. The provisions of Articles 15, 16 and 18 apply to remuneration and pensions paid for services rendered in the context of an industrial or commercial activity carried out by a Contracting State or one of its political subdivisions or local authorities.

1. A teacher, teaching professional or researcher who temporarily moves to a Contracting State for the sole purpose of teaching or carrying out research in a recognized university, university college, school or other educational institution and who is, or has been, immediately prior to such a visit, resident of the other Contracting State, shall be exempt from taxation in the State referred to above in respect of remuneration for such activities for a period not exceeding two years.

2. Paragraph 1 does not apply to research income when it is carried out, not in the general interest, but primarily for the particular benefit of a particular person or persons.

The amounts received to cover the costs of maintenance, study or practical training, a student or a person in training, who is or has been immediately before arriving in a Contracting State, resident of the other Contracting State, and who is in the State referred to first for the sole purpose of continuing his studies or training, may not be subject to taxation in that State provided that they come from sources outside that State.

The income of a resident of a Contracting State not specifically mentioned in the previous articles of this Convention may be taxed only in that State, except from sources located in the other Contracting State, in which case it may also be taxed in that other State.

1. Property constituted by immovable property as defined in Article 6, belonging to a resident of one Contracting State and situated in the other Contracting State, may be taxed in that other State.

2. Property consisting of movable property forming part of the assets of a permanent establishment held by an undertaking of one Contracting State in the other Contracting State, or of movable property belonging to a fixed base used for the conduct of professional activities, may be taxed in the Contracting State in which the permanent establishment or fixed base is situated.

3. Property belonging to a resident of a Contracting State consisting of ships or aircraft operated in international traffic, as well as movable property affected by the operation of such ships or aircraft, may only be taxed in that State.

4. The other assets of a resident of a Contracting State may be subject to taxation only in that State.

1. Where a resident of Indonesia obtains income that may be taxed in Spain under the provisions of this Agreement, the amount of the Spanish tax on such income shall be deductible from the Indonesian tax payable to that resident. However, the amount of the deduction may not exceed the part of the Indonesian tax corresponding to those income.

2. (a) Where a resident of Spain obtains income or possesses assets which, in accordance with the provisions of this Agreement, may be taxed in Indonesia, Spain shall deduct:

(i) the income tax on that resident, equal to the income tax paid in Indonesia;

(ii) of the tax levied on the property of that resident, an amount equal to the property tax paid in Indonesia.

However, in either case, this deduction may not exceed the part of the income or property tax, calculated before the corresponding deduction, as the case may be, to the income or property that may be taxed in Indonesia.

(b) In the case of dividends paid by a company resident in Indonesia to a company resident in Spain which directly detains at least 25 per cent of the capital of the company paying the dividends, the tax actually paid by the company in question in respect of the profits from which the dividends are paid shall be taken into account, in addition to the amount deductible under point (a) of this paragraph, in the determination of the tax credit, in addition to the amount deductible under point (a) of this paragraph, in respect of the tax actually paid by the company in question in respect of the profits from which the dividends are paid, in the amount corresponding to such dividends, provided that such amount is included, for this purpose, in the taxable base of the company receiving them.

This deduction, together with the deduction applicable in respect of dividends under point (a) of this paragraph, may not exceed the part of the income tax calculated prior to the deduction attributable to income subject to taxation in Indonesia.

(c) Where, under any provision of the Convention, the income obtained or assets held by a resident of Spain are exempt from taxation in Spain, Spain may, however, take into account the income or assets exempted in calculating the tax on the remaining income or assets of that resident.

1. Nationals of a Contracting State shall not be subject in the other Contracting State to any taxes or obligations relating thereto which are not or are more burdensome than those to which nationals of that other State who are in the same circumstances are or may be subject. This provision shall also apply, notwithstanding the provisions of article 1, to persons who are not residents of one or any of the Contracting States.

2. Permanent establishments held by an undertaking of one Contracting State in the other Contracting State shall not be subject to taxation in that other State in a less favourable manner than undertakings of that other State carrying out the same activities. This provision may not be interpreted as obliging a Contracting State to grant to residents of the other Contracting State the personal deductions, reliefs and tax reductions it grants to its own residents in view of their marital status or family burdens.

3. Undertakings of a Contracting State whose capital is wholly or partly detained or controlled, directly or indirectly, by one or more residents of the other Contracting State shall not be subject in the State referred to above to any tax or obligation relating thereto which is not or is more burdensome than those to which similar undertakings of the State referred to above are or may be subject.

4. Unless Article 9(7) or Article 12(6) applies, interest, royalties and other expenses paid by an undertaking of a Contracting State to a resident of the other Contracting State shall be deductible for the determination of the profits of that undertaking subject to taxation under the same conditions as if they had been paid to residents of the State referred to first. Similarly, the debts of an undertaking of a Contracting State shall be deductible for the determination of the taxable assets of that undertaking under the same conditions as if they had been contracted with a resident of the State referred to first.

5. The provisions of this Article apply to taxes of any kind or name.

1. Where a person considers that the measures taken by one or both Contracting States imply or may entail for him an imposition which is not in conformity with the provisions of this Convention, irrespective of the remedies provided for by the domestic law of those States, he may submit his case to the competent authority of the Contracting State of which he is resident, or if Article 25(1) applies, to that of the Contracting State of which he is a national. The case must arise within two years of the first notification of the measure involving an imposition not in accordance with the provisions of the Convention.

2. The competent authority shall, if it finds the complaint well founded and if it is not in a position to adopt a satisfactory solution, make every effort to resolve the matter by amicable agreement with the competent authority of the other Contracting State in order to avoid an imposition not in conformity with this Convention.

3. The competent authorities of the Contracting States shall endeavour to resolve difficulties or to dispel doubts arising from the interpretation or application of the Convention by amicable agreement. They may also agree to try to avoid double taxation in cases not covered by the Convention.

4. The competent authorities of the Contracting States may communicate directly with each other in order to reach agreement within the meaning of the preceding paragraphs. The competent authorities shall, by mutual agreement, lay down the procedures, requirements, methods and techniques for the application of the mutual agreement procedure provided for in this Article.

1. The competent authorities of the Contracting States shall exchange the information necessary to implement the provisions of this Convention or of the national law of the Contracting States relating to taxes covered by this Convention to the extent that the resulting taxation is not contrary to the Convention, in particular to prevent fraud or evasion of such taxes. The exchange of information is not limited by Article 1. Information received by a Contracting State shall be kept secret in the same way as information obtained under the domestic law of that State and shall be communicated only to the persons or authorities (including the courts and administrative bodies) responsible for the management or collection of taxes covered by the Convention, to the declaratory or executive procedures relating to such taxes or to the resolution of appeals relating thereto. Such persons or authorities shall use the information only for these purposes. They may disclose such information in public hearings of the courts or in court judgements.

2. In no case may the provisions of paragraph 1 be interpreted as obliging a Contracting State to:

(a) take administrative measures contrary to its legislation or administrative practice or those of the other Contracting State;

(b) to provide information which cannot be obtained on the basis of their own legislation or in the exercise of their normal administrative practice or that of the other Contracting State;

(c) provide information revealing a commercial, industrial or professional secret or a commercial procedure, or information whose communication is contrary to public policy.

The provisions of this Convention do not affect the tax privileges enjoyed by diplomatic agents or consular officials, in accordance with the general principles of international law or under special agreements.

1. This Convention shall be ratified and instruments of ratification shall be exchanged as soon as possible.

2. The Convention shall enter into force on the date of the exchange of instruments of ratification, and its provisions shall have effect in relation to taxes payable in respect of tax periods beginning on the first day of January of the calendar year following the entry into force of the Convention.

1. This Convention shall remain in force until reported by the Contracting States. Any Contracting State may denounce the Convention by diplomatic means by notification of the denunciation at least six months before the end of any calendar year after a period of five years from the date of entry into force of the Convention. In such a case, the Convention shall cease to have effect in relation to the taxes payable in respect of the tax periods beginning on the first day of January of the calendar year following that in which the complaint occurs.

Done at Jakarta on 30 May 1995, in duplicate, in the English, Indonesian and Spanish languages, the three texts being equally reliable. In the event of differences in interpretation, the English text shall prevail.

For the Government of the Kingdom of Spain, Javier Gómez Navarro, Minister of Trade and Tourism.–For the Government of the Republic of Indonesia, Ali Alatas Sh, Minister of Foreign Affairs.

At the time of the signing of the Convention on the Prevention of Double Taxation and on the Prevention of Tax Evasion in the Field of Income and Property Tax, signed on this day between the Kingdom of Spain and the Republic of Indonesia, the signatories have agreed that the following provisions shall form an integral part of it.

1. Ad. to Article 5(4)(a).

It is understood that the use of facilities for the mere delivery of goods or goods shall not be regarded as a permanent establishment unless the facilities are used as a sales dispatch.

2. Ad. to Article 7(1)(b) and (c).

The competent authorities of the Contracting States may consult each other on the similarity of the goods sold or of the business activities of reference. It is understood that the above provisions shall also apply where sales or activities determine losses for the company.

3. Ad. to Article 7(4).

The term ‘mere purchase by the permanent establishment for the undertaking’ does not include ‘purchases for third parties’.

4. Ad. to Article 10(2)

It is understood that paragraph 2 does not apply, in the case of Spain, to income distributed or not, imputed to the members of the companies and entities referred to in Article 12.2 of Law 61/1978 of 27 December, while such income is not subject to the Spanish Company Tax. Such income may be taxed in Spain in accordance with the provisions of its domestic legislation.

5. Ad. Article 11(3).

The terms ‘Central Bank’ and ‘Government-controlled financial institutions’ mean, respectively:

(a) Central Bank:

(i) in the case of Indonesia, the Bank of Indonesia;

(ii) in the case of Spain, the Bank of Spain.

(b) The financial institutions referred to in Article 11(3) shall be determined by means of an exchange of letters between the competent authorities of the Contracting States.

6. Ad. to Article 11(4).

The term ‘interest’ used in that Article does not include interest payments in connection with the sale on credit of industrial, commercial or scientific equipment; such interest shall be exempt from taxation in the Contracting State from which it comes.

7. Ad. to Article 15(2)

It is understood that the income of dependent personal services cannot be taxed in the Contracting State in which the employment is exercised merely because the corresponding remuneration is borne by a permanent establishment consisting of the services referred to in Article 5(3)(b).

8. Ad. to article 16.

The term ‘any other body with similar functions’ includes, in the case of Indonesia, ‘anggauta Pengurus (members of the committee)’ and ‘Komisaris (commissioners)’.

9. Ad. to Article 18(2)

The term ‘government-recognized pension fund’ includes, in the case of Indonesia, the ‘employee insurance fund (ASTEK)’.

10. Ad. to Article 25(5).

It is understood that Indonesia will continue to apply its local tax on foreigners.

In faith, the signatories, duly authorized to do so, have signed this Protocol.

Done at Jakarta on 30 May 1995, in duplicate, in the English, Indonesian and Spanish languages, the three texts being equally reliable. In the event of differences in interpretation, the English text shall prevail.

For the Government of the Kingdom of Spain, Javier Gómez Navarro, Minister of Trade and Tourism.–For the Government of the Republic of Indonesia, Ali Alatas Sh, Minister of Foreign Affairs.

This Convention entered into force on 20 December 1999, the date of the exchange of instruments of ratification, as provided for in Article 29 thereof.

What is made public for general knowledge.

Madrid, December 23, 1999. –The Technical Secretary General of the Ministry of Foreign Affairs, Julio Núñez Montesinos.