Bulgaria

AGREEMENT BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE REPUBLIC OF BULGARIA

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 Contracting States.

Article 2
TAXES COVERED

1. This Agreement shall apply to
   taxes on income imposed on behalf of a Contracting State, irrespective of the manner in which they are
   levied.

2. There shall be regarded as taxes
   on income all taxes imposed on total income or on elements of income, including taxes on gains from
   the alienation of movable or immovable property.

3. The existing taxes to which the Agreement shall
   apply are :

   (a)	in Bulgaria:
   	(i)	the tax on total income; and
   	(ii)	the tax on profit, (hereinafter referred to as “Bulgarian tax )
   (b)	In Indonesia : the income tax imposed under the Undang-undang Pajak Penghasilan 1984 (Law No. 7 of 1983). (hereinafter referred to as “Indonesian tax” )

4. This Agreement shall also apply to
   any identical or substantially similar taxes, which are imposed after the date of signature of this
   Agreement in addition to, or in place of, those referred to in paragraph 1 of this Article. The
   competent authorities of the Contracting States shall notify each other of any substantial changes
   which have been made in their respective taxation laws within a reasonable period of time after such
   changes. In case any doubt arises in determining whether such taxes are identical or substantially
   similar the competent authorities of the Contracting States may consult each other, due regard being
   had to the provisions of Article 24 (Mutual agreement procedure).

Article 3
GENERAL DEFINITIONS

1. For the purpose of this Agreement,
   unless the context otherwise requires:

   (a)	(i)	the term “Bulgaria” means the Republic of Bulgaria, and, when used in a geographical sense, means the territory over which it exercises its State sovereignty and jurisdiction, as well as the continental shelf and the exclusive economic zone over which it exercises sovereign rights according to international law;
   	(ii)	the term “Indonesia” comprises the territory of the Republic of Indonesia as defined in its laws and the adjacent areas over which the Republic of Indonesia has sovereign rights or jurisdiction in accordance with international law;
   (b)	the term “person” means an individual, a legal person, including company, and any other body of persons treated as an entity for tax purposes;
   (c)	the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
   (d)	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;
   (e)	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;
   (f)	the term “competent authority” means:
   	(i)	in Bulgaria, the Minister of Finance or his authorized representative;
   	(ii)	in Indonesia, the Minister of Finance or his authorized representative;
   (g)	the terms “a Contracting State” and “the other Contracting State” mean Bulgaria or Indonesia, as the context requires; the term “the Contracting States” means Bulgaria and Indonesia.

2. As regards 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 law of that State concerning the taxes to which the
   Agreement applies. 

Article 4
RESIDENT

1. For the purpose of this Agreement,
   the term “resident of a Contracting State” means any person who, under the laws of that State, is
   liable to tax therein by reason of his nationality, domicile, residence, place of head office or
   registration, place of management or any other criterion of a similar nature.

2. Where by reason of the provisions
   of paragraph 1 an individual 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.

3. Where by reason of the provisions
   of paragraph 1 a person other than an individual is a resident of both Contracting States, the
   competent authorities of the States shall settle the question by mutual agreement, taking into
   consideration in which State the place of effective management of such person is situated. 

Article 5
PERMANENT ESTABLISHMENT

1. For the purposes of this
   Agreement, the term “permanent establishment” means a fixed place of business through which the
   business of an enterprise is wholly or partly carried on. 

2. The term “permanent establishment” includes
   especially: 

   (a)	a place of management;
   (b)	a branch;
   (c)	an office;
   (d)	a factory;
   (e)	a workshop or shop;
   (f)	a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, including ships, installations or other facilities for exploration or exploitation of natural resources.

3. The term permanent establishment likewise
   encompasses;

   (a)	a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue in one of the Contracting States for a period of more than 6 months;
   (b)	the furnishing of services, including consultancy services by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than 120 days within any 12-month period.

4. Notwithstanding the provisions of
   the preceding paragraphs of this Article, the term “permanent establishment” shall be deemed not to
   include: 

   (a)	the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;
   (b)	the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
   (c)	the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
   (d)	the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
   (e)	the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities of a preparatory or auxiliary character, for the enterprise;
   (f)	the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e) provided that the overall activity is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of
   paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 6
   applies – is acting on behalf of an enterprise of the other Contracting State, and has, and habitually
   exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise,
   that enterprise shall be deemed to have a permanent establishment in that Contracting State in respect
   of any activities which that person undertakes for the enterprise, unless the activities of such
   person are limited to those mentioned in paragraph 4 of this Article. 

6. An enterprise of a Contracting
   State shall not be deemed to have a permanent establishment in the other Contracting State merely
   because it carries on business in that other State through a broker, general commission agent or any
   other agent of an independent status, provided that such persons are acting in the ordinary course of
   their business. 

7. The fact that a company which is a
   resident of a Contracting State controls or is controlled by a company which is a resident of the
   other Contracting State, or which carries on business in that other State (whether through a permanent
   establishment or otherwise), shall not of itself constitute either company a permanent establishment
   of the other. 

Article 6
INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a
   Contracting State from immovable property (including income from agriculture or forestry) situated in
   the other Contracting State may be taxed in that other Contracting State. 

2. The term “immovable property”
   shall have the meaning which it has under the laws of the Contracting State in which the property in
   question is situated. The term shall in any case include property accessory to immovable property,
   livestock and equipment used in agriculture and forestry, rights to which the provisions of general
   law respecting landed property apply, usufruct of immovable property and rights to variable or fixed
   payments as consideration for the working of, or the right to work, mineral deposits, sources and
   other natural resources; ships, boats and aircraft shall not be regarded as immovable property. 

3. The provisions of paragraph 1
   shall apply to income derived from the direct use, letting, or use in any other form of immovable
   property.

4. The provisions of paragraphs 1 and
   3 shall also apply to the income from immovable property of an enterprise and to income from immovable
   property used for the performance of independent personal services. 

Article 7
BUSINESS PROFITS

1. The profits of an enterprise of a
   Contracting State shall be taxable only in that State unless the enterprise carries on business in the
   other Contracting State through a permanent establishment situated therein. If the enterprise carries
   on business as aforesaid, the profits of the enterprise may be taxed in the other State but only in so
   much of them as is attributable to that permanent establishment. 

2. Subject to the provisions of
   paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting
   State through a permanent establishment situated therein, there shall in each Contracting State be
   attributed to that permanent establishment the profits which it might be expected to make if it were a
   distinct and separate enterprise engaged in the same or similar activities under the same or similar
   conditions and dealing wholly independently with the enterprise of which it is a permanent
   establishment.

3. In determining the profits of a
   permanent establishment, there shall be allowed as deductions expenses which are incurred for the
   purposes of the permanent establishment including executive and general administrative expenses so
   incurred, whether in the State in which the permanent establishment is situated or elsewhere. 

4. For the purpose of the preceding
   paragraphs, the profits to be attributed to the permanent establishment shall be determined by the
   same method year by year unless there is good and sufficient reason to the contrary.

5. Where profits include items of
   income which are dealt with separately in other Articles of this Agreement, the provisions of those
   Articles shall not be affected by the provisions of this Article. 

Article 8
SHIPPING AND AIR TRANSPORT

1. Profits derived by an enterprise
   of a Contracting State from the operation of ships or aircraft in international traffic shall be
   taxable in that Contracting State. 

2. The provisions of paragraph 1
   shall also apply to profits from the participation in a pool, a joint business or an international
   operating agency. 

Article 9
ASSOCIATED ENTERPRISES

1. Where:

   (a)	an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
   (b)	the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
   and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2. Where a Contracting State includes
   in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise
   of the other Contracting State has been charged to tax in that other State and the profits so included
   are profits which would have accrued to the first-mentioned enterprise if the conditions made between
   the two enterprises had been those which would have been made between independent enterprises, then
   that other State shall make an appropriate adjustment to the amount of the tax charged therein on
   those profits. In determining such adjustment, due regard shall be had to the other provisions of the
   Agreement and the competent authorities of the Contracting States shall consult each other. 

Article 10
DIVIDENDS

1. Dividends paid by a company which
   is a resident of a 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 of which the company paying the dividends is a resident and
   according to the laws of that State, but if the recipient is the beneficial owner of the dividends the
   tax so charged shall not exceed 15% of the gross amount of the dividends. The competent authorities of
   the Contracting States shall by mutual agreement settle the mode of application of this limitation.
   The provisions of this paragraph shall not affect the taxation of the company in respect of the
   profits out of which the dividends are paid. 

3. The term “dividends” as used in
   this Article means income from shares or other rights, not being debt-claims, participating in
   profits, as well as income from other corporate rights which is subjected to the same taxation
   treatment as income from shares by the laws of the State of which the company making the distribution
   is a resident. 

4. The provisions of paragraphs 1 and
   2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State,
   carries on business in the other Contracting State of which the company paying the dividends is a
   resident, through a permanent establishment situated therein, or performs in that other State
   independent personal services from a fixed base situated therein, and the holding in respect of which
   the dividends are paid is effectively connected with such permanent establishment or fixed base. In
   such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. Where a company which is a
   resident of a Contracting State derives profits or income from the other Contracting State, that other
   State may not impose any tax on the dividends paid by the company, except insofar as such dividends
   are paid to a resident of that other State or insofar as the holding in respect of which the dividends
   are paid is effectively connected with a permanent establishment or a fixed base situated in that
   other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed
   profits, even if the dividends paid or the undistributed profits, consist wholly or partly of profits
   or income arising in that other State. 

6. Notwithstanding any other
   provisions of this Agreement where a company which is a resident of a Contracting State has a
   permanent establishment in the other Contracting State, the profits of the permanent establishment may
   be subjected to an additional tax in that other State in accordance with its law, but the additional
   tax so charged shall not exceed 15% of the amount of such profits after deducting therefrom income tax
   and other taxes on income imposed thereon in that other State. 

Article 11
INTEREST

1. Interest arising in a 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 in which it arises, and according to the laws of that State, but if the
   recipient is the beneficial owner of the interest the tax so charged shall not exceed 10% of the gross
   amount of the interest. The competent authorities of the Contracting States shall by mutual agreement
   settle the mode of application of this limitation. 

3. Notwithstanding the provisions of
   paragraph 2, interest arising in a Contracting State and derived by the Government of the other
   Contracting State including local authorities thereof, a political subdivision, the Central Bank or
   any financial institution controlled by that Government, shall be exempt in the first-mentioned
   State. 

4. For the purposes of paragraph 3,
   the terms “the Central Bank” and “financial institution controlled by that Government” mean financial
   institution, the capital of which is wholly owned by the Government of a Contracting State, as may be
   agreed upon from time to time between the competent authorities of the Contracting States, and 

   (a)	In the case of Bulgaria : the “Bulgarian National Bank”; and
   (b)	In the case of Indonesia : the “Bank Indonesia” (the Central Bank of Indonesia).

5. The term “interest” as used in
   this Article means income from debt-claims of every kind, whether or not secured by a mortgage, and
   whether or not carrying a right to participate in the debtor’s profits, and, in particular, income
   from government securities and income from bonds or debentures, including premiums and prizes
   attaching to such securities, bonds or debentures, as well as income assimilated to income from money
   lent by the taxation law of the State in which the income arises, including interest on deferred
   payment sales. 

6. The provisions of paragraphs 1 and
   2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State,
   carries on business in the other Contracting State in which the interest arises, through a permanent
   establishment situated therein, or performs in that other State independent personal services from a
   fixed base situated therein, and the debt-claim in respect of which the interest is paid is
   effectively connected with such permanent establishment or fixed base. In such case, the provisions of
   Article 7 or Article 14, as the case may be, shall apply. 

7. Interest shall be deemed to arise
   in a Contracting State when the payer is that State itself, a local authority, or a resident of that
   State. Where, however, the person paying the interest, whether he is a resident of a Contracting State
   or not, has in a Contracting State a permanent establishment or a fixed base in connection with which
   the indebtedness on which the interest is paid was incurred, and such interest is borne by such
   permanent establishment or fixed base, then such interest shall be deemed to arise in the State in
   which the permanent establishment or fixed base is situated. 

8. Where, by reason of a special
   relationship between the payer and the beneficial owner or between both of them and some other person,
   the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount
   which would have been agreed upon by the payer and the beneficial owner in the absence of such
   relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such
   case, the excess part of the payments shall remain taxable according to the laws of each Contracting
   State, due regard being had to the other provisions of this Agreement.

Article 12
ROYALTIES

1. Royalties arising in a Contracting
   State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also
   be taxed in the Contracting State in which they arise, and according to the laws of that State, but if
   the recipient is the beneficial owner of the royalties the tax so charged shall not exceed 10% of the
   gross amount of the royalties. The competent authorities of the Contracting States shall by mutual
   agreement settle the mode of application of this limitation. 

3. The term “royalties” as used in
   this Article means payments of any kind received as a consideration for the sale, the use of, or the
   right to use, any copyright of literary, artistic or scientific work including cinematograph film or
   films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan,
   secret formula or process, or for the use of, or the right to use, industrial, commercial or
   scientific equipment, or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and
   2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State,
   carries on business in the other Contracting State in which the royalties arise, through a permanent
   establishment situated therein, or performs in that other State independent personal services from a
   fixed base situated therein, and the right or property in respect of which the royalties are paid is
   effectively connected with such a permanent establishment or fixed base. In such case, the provisions
   of Article 7 or Article 14, as the case may be, shall apply. 

5. Royalties shall be deemed to arise
   in a Contracting State when the payer is that State itself, a local authority, or a resident of that
   State. Where, however, the person paying the royalties, whether he is a resident of a Contracting
   State or not, has in a Contracting State a permanent establishment or a fixed base in connection with
   which the liability to pay the royalties was incurred, and such royalties are borne by such permanent
   establishment or fixed base, then such royalties shall be deemed to arise in the State in which the
   permanent establishment or fixed base is situated.  borne by such permanent establishment or
   fixed base, then such royalties shall be deemed to arise in the State in which the permanent
   establishment or fixed base is situated.

6. Where, by reason of a special
   relationship between the payer and the beneficial owner or between both of them and some other person,
   the amount of the royalties, having regard to the use, right or information for which they are paid,
   exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the
   absence of such relationship, the provisions of this Article shall apply only to the last-mentioned
   amount. In such case, the excess part of the payments shall remain taxable according to the laws of
   each Contracting State, due regard being had to the other provisions of this Agreement. 

Article 13
CAPITAL GAINS

1. Gains derived by a resident of a
   Contracting State from the alienation of immovable property referred to in Article 6 and situated in
   the other Contracting State may be taxed in that other State.

2. Gains from the alienation of
   movable property forming part of the business property of a permanent establishment which an
   enterprise of a Contracting State has in the other Contracting State or of movable property pertaining
   to a fixed base available to a resident of a Contracting State in the other Contracting State for the
   purpose of performing independent personal services, including such gains from the alienation of such
   a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in
   that other State. 

3. Gains derived by a resident of a
   Contracting State from the alienation of ships or aircraft operated in international traffic or
   movable property pertaining to the operation of such ships or aircraft shall be taxable only in that
   State. 

4. Gains from the alienation of any
   property other than that referred to in the preceding paragraphs shall be taxable only in the
   Contracting State of which the alienator is a resident. 

Article 14
INDEPENDENT PERSONAL SERVICES

1. Income derived by a resident of a
   Contracting State in respect of professional services or other activities of an independent character
   shall be taxable only in that State unless he has a fixed base regularly available to him in the other
   Contracting State for the purpose of performing his activities or he is present in that other State
   for a period or periods exceeding in the aggregate 91 days in any taxable year. 
   If he has such a fixed base or remains in that other State for the aforesaid period or periods, the
   income may be taxed in that other State but only so much of it as is attributable to that fixed base
   or is derived in that other State during the aforesaid period or periods.

2. The term “professional services”
   includes especially independent scientific, literary, artistic, educational or teaching activities as
   well as the independent activities of physicians, lawyers, engineers, architects, dentists and
   accountants. 

Article 15
DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of
   Articles 16, 18, 19 and 20, salaries, wages and other similar remuneration derived by a resident of a
   Contracting State in respect of an employment shall be taxable only in that Contracting State unless
   the employment is exercised in the other Contracting State. If the employment is so exercised, such
   remuneration as is derived therefrom may be taxed in that other State. 

2. Notwithstanding the provisions of
   paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment
   exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

   a)	the recipient is present in that other State for a period or periods not exceeding in the aggregate 183 days within any taxable year; and
   b)	the remuneration is paid by, or on behalf of, an employer who is not a resident of that other State; and
   c)	the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

3. Notwithstanding the preceding
   provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship
   or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable
   only in that State. 

Article 16
DIRECTORS FEES

Directors’ fees and other similar payments derived by
a resident of a Contracting State in his capacity as a member of the board of directors or any other
similar organ of a company which is a resident of the other Contracting State may be taxed in that other
State.

Article 17
ARTISTES AND ATHLETES

1. Notwithstanding the provisions of
   Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a
   theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his
   personal activities as such exercised in the other Contracting State, may be taxed in that other
   State. 

2. Where income in respect of
   personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to
   the entertainer or athlete himself but to another person, that income shall, notwithstanding the
   provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the
   entertainer or athlete are exercised. 

3. Notwithstanding the provisions of
   paragraphs 1 and 2, income derived from activities referred to in paragraph 1 performed under a
   cultural agreement or arrangement between the Contracting States, or if the visit to that State is
   wholly or substantially supported by funds of the Contracting State of which the entertainer is a
   resident, of local authority or public institution thereof, shall be exempt from tax in the
   Contracting State in which the activities are exercised. 

Article 18
PENSIONS

1. Subject to the provision of
   paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting
   State may be taxable in that Contracting State. 

2. Notwithstanding the provisions of
   paragraph 1, any pension or other similar remuneration paid to a resident of one of the Contracting
   States from a source in the other Contracting State in consideration of past employment or services in
   that other Contracting State and any annuity paid to such a resident from such a source may be taxed
   in that other State. 

3. The term “annuity” means a stated
   sum payable periodically at stated times during life or during a specified or ascertainable period of
   time under an obligation to make the payments in return for adequate and full consideration in money
   or money’s worth. 

Article 19
GOVERNMENT SERVICE

Article 20
TEACHERS, RESEARCHERS AND STUDENTS

1. An individual who visits a
   Contracting State at the invitation of that State or of a university, college, school, museum or other
   cultural institution of that State or under an official programme of cultural exchange for a period
   not exceeding two years solely for the purpose of teaching, giving lectures or carrying out research
   at such institution and who is, or was immediately before that visit, a resident of the other
   Contracting State shall be exempt from tax in the first-mentioned State on his remuneration for such
   activity, provided that such remuneration is derived by him from outside that State. 

2. Payments which a student,
   apprentice or business trainee who is or was immediately before visiting a Contracting State, a
   resident of the other Contracting State and who is present in the first- mentioned State solely for
   the purpose of his education or training, receives for the purpose of his maintenance, education or
   training, shall not be taxed in that first-mentioned State, provided that such payments are made to
   him from sources outside that State. 

Article 21
OTHER INCOME

1. Items of income of a resident of a
   Contracting State, wherever arising, not dealt with in the foregoing articles of this Agreement shall
   be taxable only in that State. 

2. The provisions of paragraph 1
   shall not apply to income, other than income from immovable property as defined in paragraph 2 of
   Article 6, if the recipient of such income, being a resident of a Contracting State, carries on
   business in the other Contracting State through a permanent establishment situated therein, or
   performs in that other State independent personal services from a fixed base situated therein, and the
   right or property in respect of which the income is paid is effectively connected with such permanent
   establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may
   be, shall apply. 

3. Notwithstanding the provisions of
   paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the
   foregoing articles of this Agreement and arising in the other Contracting State may be taxed in that
   other State. 

Article 22
METHOD FOR ELIMINATION OF DOUBLE TAXATION

1. In Bulgaria, double taxation shall
   be eliminated in the following manner: 

   (a)

   Where a resident of Bulgaria derives income which in accordance with the provisions of this Agreement may be taxed in the other Contracting State, the first-mentioned State shall exempt such income or capital from tax. Such income may, nevertheless, be taken into account in calculating the amount of the tax on the remaining income or capital of such resident.

   (b)

   Notwithstanding the provisions of subparagraph (a), where a resident of Bulgaria derives interest or royalties which, in accordance with the provisions of Articles 11 and 12 of this Agreement, may be taxed in Indonesia. Bulgaria shall allow as a deduction from the tax on the income of that resident an amount equal to the tax actually paid in Indonesia. Such deduction shall not, however, exceed that part of the Bulgarian tax, as computed before the deduction is given, which is attributable to such items of the income derived in Indonesia.

2. In Indonesia, double taxation
   shall be eliminated in the following manner :

   (a)	Where a resident of Indonesia derives income which in accordance with the provisions of this Agreement may be taxed in Bulgaria, the amount of Bulgarian tax payable in respect of the income shall be allowed as a credit against the Indonesian tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Indonesian tax which is appropriate to such income.
   (b)	For the purpose of allowance as a credit referred to in subparagraph (a) of this paragraph the tax paid in Bulgaria shall be deemed to include the tax which is otherwise payable but has been reduced or waived by Bulgaria under its legal provisions for tax incentives. However, the provisions of this paragraph will be applicable in accordance with the Indonesian law in force.

Article 23
NON-DISCRIMINATION

1. Nationals of a Contracting State
   shall not be subjected in the other Contracting State to any taxation or any requirement connected
   therewith which is other or more burdensome than the taxation and connected requirements to which
   nationals of that other State in the same circumstances are or may be subjected. This provision shall,
   notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or
   both of the Contracting States. 

2. The term “nationals” means:

   (a)	All individuals possessing the nationality of a Contracting State;
   (b)	All legal persons, partnerships and associations deriving their status as such from the laws in force in a Contracting State.

3. The taxation on a permanent
   establishment which an enterprise of a Contracting State has in the other Contracting State and
   taxation on independent personal services shall not be less favourably levied in that other State than
   the taxation levied on enterprises of that other State carrying on the same activities. 

4. Nothing contained in this Article
   shall be construed as obliging either Contracting State to grant to individuals not resident in that
   State any of the personal allowances, reliefs and reductions for tax purposes which are granted to
   individuals resident in that State. 

5. Enterprises of a Contracting
   State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or
   more residents of the other Contracting State, shall not be subjected in the first-mentioned State to
   any taxation or any requirement connected therewith which is other or more burdensome than the
   taxation and connected requirements to which other similar enterprises of the first-mentioned State
   are or may be subjected. 

6. For the purpose of determining the
   taxable income of a resident of one of the Contracting States interest, royalties and other
   disbursements paid by a resident of a Contracting State to a resident of the other Contracting State
   shall be deductible under the same conditions, as if they have been paid to a resident of the
   first-mentioned State.

7. In this Article the term
   “taxation” means taxes which are the subject of this Agreement.

Article 24
MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the
   actions of one or both of the Contracting States result or will result for him in taxation not in
   accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the
   domestic law of those States, present his case to the competent authority of the Contracting State of
   which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the
   Contracting States of which he is a national. The case must be presented within two years from the
   first notification of the action resulting in taxation not in accordance with the provisions of the
   Agreement. 

2. The competent authority shall
   endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a
   satisfactory solution, to resolve the case by mutual agreement with the competent authority of the
   other Contracting State, with a view to the avoidance of taxation which is not in accordance with this
   Agreement.

3. The competent authorities of the
   Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising
   as to the interpretation or application of the Agreement. They may also consult together for the
   elimination of double taxation in cases not provided for in the Agreement. 

4. The competent authorities of the
   Contracting States may communicate with each other directly for the purpose of reaching an agreement
   in the sense of the preceding paragraphs. The competent authorities, through consultations, shall
   develop appropriate bilateral procedures, conditions, methods and techniques for the implementation of
   the mutual agreement procedure provided for in this Article. 

Article 25
EXCHANGE OF INFORMATION

1. The competent authorities of the
   Contracting States shall exchange such information as is necessary for carrying out the provisions of
   this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the
   Agreement, insofar as the taxation thereunder is not contrary to the Agreement in particular for the
   prevention of fraud or evasion of such taxes. Any information received by a Contracting State shall be
   treated as secret in the same manner as information obtained under the domestic laws of that State.
   However, if the information is originally regarded as secret in the transmitting State it shall be
   disclosed only to persons or authorities (including courts and administrative bodies) involved in the
   assessment or collection of, the enforcement or prosecution in respect of, or the determination of
   appeals in relation to, the taxes which are the subject of the Agreement. Such persons or authorities
   shall use the information only for such purposes but may disclose the information in public court
   proceedings, or in judicial decisions. 

2. In no case shall the provisions of
   paragraph 1 be construed so as to impose on a Contracting State the obligation:

   (a)	to carry out administrative measures at variance with the laws and administrative practice of that or, of the other Contracting State;
   (b)	to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
   (c)	to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure or which would be contrary to public policy (ordre public).

Article 26
MISCELLANEOUS RULES

The provisions of this agreement shall
not be construed to restrict in any manner any exclusion, exemption, deduction, credit, or other allowance
now or hereafter accorded :

Article 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS

Nothing in this Agreement shall affect the fiscal
privileges of diplomatic agents or consular officers under the general rules of international law or under
the provisions of special Agreements.

Article 28
ENTRY INTO FORCE

1. This Agreement shall enter into
   force on the later of the dates on which the respective Governments notify each other in writing that
   the formalities constitutionally required in their respective States have been complied with. 

2. This Agreement shall have effect:

   (a)	in respect of tax withheld at source, on or after 1 January in the year next following that in which the Agreement enters into force;
   (b)	in respect of other taxes, for taxable years beginning on or after 1 January in the year next following that in which the Agreement enters into force.

Article 29
TERMINATION

This Agreement shall remain in force until terminated
by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels,
by giving written notice of termination on or before the thirtieth day of June of any calendar year
following after the period of 5 years from the year in which the Agreement enters into force.

In such case, the Agreement shall
cease to have effect:

IN WITNESS WHEREOF the undersigned,
duly authorized thereto by their respective Governments, have signed this Agreement.

DONE in duplicate in Sofia on the
eleventh day of January in the year 1991 in the English Language, both texts being equally authentic.

PROTOCOL

At the moment of the signing of the Agreement between
the Government of the Republic of Indonesia and the Government of the Republic of Bulgaria for the
avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the
undersigned have agreed that the following provisions shall form an integral part of the Agreement:

1. Ad Article 3, paragraph (d):

 It is understood that in the case of Bulgaria
the term “enterprise” shall include also enterprises of individuals, whether legal persons or not.

2. Ad Article 5, paragraph 4, subparagraphs (a) and
   (b) and paragraph 5:

It is understood that the use of facilities solely for
the purpose of mere delivery of goods or merchandise and the maintenance of a stock of goods or
merchandise solely for the purpose of mere delivery shall not be treated as permanent establishment for
the purposes of this Agreement. On the contrary, the regular delivery in such cases and in the case of
activities of a person – other than acting as an agent of an independent status on behalf of an enterprise
and who habitually maintains a stock of goods or merchandise in the other Contracting State shall be
deemed to be a permanent establishment for the purposes of this Agreement.

3. Ad Article 5, paragraph 4:

It is understood that the goods exposed on the sample
fair or exhibition which are to be sold after the closing of such fair or exhibition shall not be
considered as permanent establishment for the purposes of this Agreement.

4. Ad Article 5, paragraph 6:

It is understood that where a broker, a general
commission agent or any other agent of an independent status, acting in a Contracting State wholly or
almost wholly for an enterprise of the other Contracting State, he shall not be considered to be an agent
of an independent status within the meaning of the said paragraph.

5. Ad Article 7:
   

   (a)

   In respect of paragraph 1, the term “profits attributable to that permanent establishment” shall include profits derived by an enterprise of a Contracting State in the other Contracting State from the sale of goods or merchandise from the same kind as those sold through the permanent establishment, situated in that other State, or from other business activities from the same kind as those performed through this permanent establishment, and those profits shall be taxable in that other State provided that the permanent establishment has contributed in any manner in those sales or activities.

   (b)

   In respect of paragraph 3, it is agreed that while determining the profits of a permanent establishment, no deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or except in the case of a banking enterprise by way of interest on money lent to the permanent establishment. Likewise no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged, (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or except in the case of a banking enterprise by way of interest on money lent to the head office of the enterprise or any of its other offices.

6. Ad Article 10, paragraph 6:

The provisions of this paragraph shall not affect the
provisions contained in any production sharing contract and contracts of work (or any other similar
contracts) relating to oil and gas sector or other mining sector concluded by the Government of Indonesia,
its instrumentality, its relevant State oil and gas company or any other entity thereof with a person who
is a resident of Bulgaria.

7. Ad Article 19:

The term “services rendered to that State or
authority” includes especially services rendered by individuals who receive remuneration from the State
budget or from the budget of such authority to which the services are rendered. The provisions of
paragraphs 1 and 2 of Article 19 shall likewise apply in respect of remuneration or pensions paid:

8. Ad Article 21:

Article 21 shall not apply for the taxation of fees
for technical services. The last-mentioned services shall remain taxable under paragraph 3, subparagraph
(b) of Article 5.

Done in duplicate in Sofia on the eleventh day of January in the year 1991 in the English language, both
texts being equally authentic.

EXCHANGE OF NOTES

I

Sofia, 11th January, 1991

Excellency,

I have the honour to acknowledge the receipt of Your
Excellency’s Note of today’s date which reads as follows:

“I have the honour to refer to the Agreement between
the Government of the Republic of Bulgaria and the Government of the Republic of Indonesia for the
avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which
was signed today and to confirm on behalf of the Government of the Republic of Bulgaria the following
understanding reached between the two Governments:

With reference to Article 5

Both Governments expressed different opinions as far
as taxation of insurance enterprises are concerned in the case when such enterprises collect premiums in
the other Contracting State or insure risks therein through an employee or through a representative who is
not an agent with an independent status. The Bulgarian Government expressed the view that the present
status of the development of mutual economic relations makes impossible such activities on behalf of
Bulgarian insurance enterprises.

His Excellency

Mr. Ivan Kostov

Minister of Finance of the Republic of Bulgaria”

Herewith I would like to confirm that if the
development of mutual economic relationship causes such a case to occur, an insurance enterprise of a
Contracting State shall, except with regard to reinsurance, be deemed to have a permanent establishment in
the other Contracting State if it collects premiums in that other State or insures risks therein through
an employee or through a representative who is not an agent of an independent status within the meaning of
Article 5 paragraph 6 of the Agreement.

I have further the honour to request Your Excellency
to be good enough to confirm the foregoing understanding on behalf of Your Excellency’s Government.

I avail myself of this opportunity to extend to Your
Excellency the assurances of my highest consideration.”

I have further the honour to confirm the foregoing
understanding contained in Your Excellency’s Note, on behalf of the Government of the Republic of
Indonesia.

Please accept, Excellency, the assurances of my
highest consideration.

A. Kobir Sasradipoera

Ambassador of the Republic of Indonesia