Hungary

AGREEMENT BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE HUNGARIAN PEOPLE’S REPUBLIC

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 or of its political subdivisions or local
   authorities, 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, taxes on the total amounts of wages or salaries paid
   by enterprises, as well as taxes on capital appreciation. 

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

   (a)

   in Indonesia : the income tax imposed under the Undang-undang Pajak Penghasilan 1984 (Law No. 7 of 1984 and to the extent provided in such income tax law, the company tax imposed under the Ordinansi Pajak Perseroan 1925 (State Gazette No. 319 of 1925 as lastly amended by Law No. 8 of 1970) and the tax imposed under the Undang-undang Pajak atas Bunga, Dividen dan Royalti 1970 (Law No. 10 of 1970), (hereinafter referred to as “Indonesian tax”);

   (b)

   in the Hungarian People’s Republic — the income tax — the profits taxes — the special corporation tax (hereinafter referred to as “Hungarian tax”).

4. The Agreement shall also apply to
   any identical or substantially similar taxes which are imposed after the date of signature of the
   Agreement in addition to, or in place of, those referred to in paragraph 3. The competent authorities
   of the Contracting States shall notify each other of any substantial changes which have been made in
   their respective taxation laws. 

Article 3
GENERAL DEFINITIONS

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

   (a)	(i)	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 the provisions of the United Nations Convention on the Law of the Sea, 1982;
   	(ii)	the term “Hungarian People’s Republic” when used in a geographical sense means the territory of the Hungarian People’s Republic;
   (b)	the terms “a Contracting State” and “the other Contracting State” mean the Hungarian People’s Republic or the Republic of Indonesia as the context requires;
   (c)	the term “person includes an individual, a company and any other body of persons;
   (d)	the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
   (e)	the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean, respectively, an enterprise carried resident of a Contracting State and an enterprise carried on by a resident of the other contracting State;
   (f)	the term “international traffic’ means any transport by a ship or aircraft operated by a resident of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
   (g)	the term “competent authority” means:
   	(i)	in Indonesia : the Minister of Finance or his authorized representative;
   	(ii)	in the Hungarian People’s Republic; the Minister of Finance or his authorized representative;
   (h)	the term “national” means :
   	(i)	any individual possessing the nationality of a Contracting State;
   	(ii)	any legal person, partnership and association deriving its status as such from the laws in force in a Contracting State.

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 purposes 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 domicile, residence, place of management or any other
   criterion of a similar nature. But this term does not include any person who is liable to tax in that
   State in respect only of income from sources in that State. 

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 he 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 a habitual abode;
   (c)	if he has a 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. 

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;
   (f)	a mine, an oil or gas well, a quarry or any other place of extraction 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 activity continues for a period of more than 3 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 4 months within any 12-month period.

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

   (a)	the use of the 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, of, 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 which have 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 of the fixed place of business resulting from this combination 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 7
   applies — is acting in a Contracting State on behalf of’ an enterprise of the other Contracting
   State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned
   Contracting State in respect of any activities which that person undertakes for the enterprise, if
   such a person: 

   (a)	has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or
   (b)	has no such authority, but habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.

6. 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 situated therein through an employee or through a representative who is not an agent of an
   independent status within the meaning of paragraph 7.

7. 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. However, when the activities of such an agent are devoted wholly or almost wholly on
   behalf of that enterprise, he will not be considered an agent of an independent status within the
   meaning of this paragraph. 

8. 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 e property (including income from agriculture or forestry) situated
   in the other Contracting State may be taxed in that other State.

2. The term “immovable property”
   shall have the meaning which it has under the law 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 also 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 staff 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 so
   much of them as is attributable to (a) that permanent establishment; (b) sales in that other State of
   goods or merchandise of the same or similar kind as those sold through that permanent establishment,
   or (c) other business activities carried on in that other State of the same or similar kind as those
   effected through 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. However,
   no such 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 moneys 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 moneys lent to the head office of the enterprise
   or any of its other offices. 

4. No profits shall be attributed to
   a permanent establishment by reason of the mere purchase by that permanent establishment of goods or
   merchandise for the enterprise. 

5. 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. 

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

Article 8
SHIPPING AND AIR TRANSPORT

1. Profits from sources within a
   Contracting State derived by a resident of the other Contracting State from the operation of ships in
   international traffic may be taxed in the first-mentioned State, but the tax imposed shall be reduced
   by an amount equal to 50% thereof. 

2. Profits from the operation of
   aircraft in international traffic shall be taxable only in the Contracting State of which the
   enterprise operating the aircraft is a resident. 

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

Article 9
ASSOCIATED ENTERPRISE

Where:

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.

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 State shall by mutual agreement settle the mode of
   application of these limitations. The provisions of this paragraph shall not affect the taxation of
   the company in respect of the profits out of which 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 taxation 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 a 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 dividend paid or the undistributed profits consist wholly or partly of profits or
   income arising in such 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 15% 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, the Central Bank or any financial institution
   controlled by that Government, or interest derived on loans guaranteed by that Government shall be
   exempt from tax 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: 

   (a)	in the case of Indonesia:
   	(i)	the “Bank Indonesia” (the Central Bank of Indonesia);
   	(ii)	such other financial institution, the capital of which is wholly owned by the Government of the Republic of Indonesia, as may be agreed upon from time to time between the competent authorities of the Contracting States;
   (b)	In the case of the Hungarian People’s Republic:
   	(i)	the National Bank of Hungary;
   	(ii)	such other financial institution in which the State has majority equity participation as may be agreed upon from time to time between the competent authorities of the Contracting States.

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. 

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 (a) such permanent establishment or fixed base, or with (b) business
   activities referred to under (c) of paragraph 1 of Article 7. 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 political subdivision, 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 15% 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 use of, or the right to
   use, any copyright of literary, artistic or scientific work, including cinematograph films. or films
   or tapes for radio or television broadcasting, any patent, trademark, design or model, plan, secret
   formula or process, or for the use of, or the rights 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 (a) such permanent establishment or fixed base, or with (b) business
   activities referred to under (c) of paragraph 1 of Article 7. 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 political subdivision, 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. 

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 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 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 aircraft operated in international traffic or movable
   property pertaining to the operation of such 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 resident.

Article 14
INDEPENDENT PERSONAL SERVICES

1. Income derived by a resident of a
   Contracting State in respect of professional services or other independent 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 aggregating 90 days in any
   twelve-month period. If he has 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. I

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, 20 and 21, 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 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 period or periods not exceeding in the aggregate 183 days within any period of 12 Months; and
   (b)	the remuneration is paid by, or on behalf of, an employer who is not a resident of the 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 on derived In respect of an employment exercised aboard a
   ship or aircraft operated in international traffic by a resident 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 may, 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. x

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

Article 18
PENSIONS

Subject to the provisions of Article
19, paragraph 1:

Article 19
GOVERNMENT SERVICE

Article 20
TEACHERS AND RESEARCHERS

A professor, teacher or researcher who makes a
temporary visit to a Contracting State solely for the purpose of teaching or conducting research at a
university, college, school or other recognized educational institution, and who is, or immediately before
such visit was, a resident of the other Contracting State shall be exempt from tax in the first-mentioned
State for a period not exceeding two years in respect of remuneration for such teaching or research.

Article 21
STUDENTS

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 22
OTHER INCOME

Items of income of a resident of a Contracting State
which are not expressly mentioned in the foregoing Articles of this Agreement shall be taxable only in
that State except that, if such income is derived from sources within the other Contracting State, it may
also be taxed in that other State.

Article 23
ELIMINATION OF DOUBLE TAXATION

Article 24
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 taxation on a permanent
   establishment which an enterprise of a Contracting State has in the other Contracting State shall not
   be less favourably levied in that other State than the taxation levied on enterprises of the other
   State carrying on the same activities. This provision shall not be construed as obliging a Contracting
   State to grant to residents of the other Contracting State any personal allowances, reliefs and
   reductions for taxation purposes on account of civil status or family responsibilities which it grants
   to its own residents.

3. 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 more burdensome than the taxation and
   connected requirements to which other similar enterprises of the first-mentioned State are or may be
   subjected. 

4. Except where the provisions of
   Article 9, paragraph 7 of Article 11, or paragraph 4 of Article 12 apply, interest, royalties and
   other disbursements paid by an enterprise of a Contracting State to a resident of the other
   Contracting State shall, for the purpose of determining the taxable profits of the other enterprise,
   be deductible under the same conditions as if they had been paid to a resident of the first-mentioned
   State. 

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

Article 25
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 this Agreement, he may, irrespective of the remedies provided by the national laws 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 24, to that of the Contracting State 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 the
   Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic
   law of the Contracting States. 

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 26
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 in so far as the taxation thereunder is not contrary to the Agreement, in particular for the
   prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article
   1. 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 and 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 subject to the Agreement. Such persons or authorities shall use the information only
   for such purposes. They may disclose the information in public court proceedings or in judicial
   decisions.

2. In no case shalI 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, of information, the disclosure of which would be contrary to public policy (ordre public).

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. The Governments of the Contracting
   States shall notify each other that the constitutional requirements for the entry into force of this
   Agreement have been complied with.

2. The Agreement shall enter into
   force thirty days after the date of the latter of the notifications referred to in paragraph 1 and its
   provisions shall have effect:

   (i)	in resped of taxes withheld at source, an income derived on or after 1 January in the calendar year next following the year in which the Agreement enters into force;
   (ii)	in respect of other taxes on income, for taxes chargeable for any tax year beginning on or after 1 January in the calendar year next following the year 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 five years from the year in which the Agreement enters into force. In such
case, the Agreement shall cease to have effect in respect of income derived on or after 1 January of the
year next following that in which the notice of termination is given.

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

DONE in duplicate at Jakarta on the
19th day of October 1989 in the English Language.

PROTOCOL

At the signing today of the Agreement between the
Government of the Hungarian People’s Republic 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, the
undersigned have agreed upon the following provisions which shall form an integral part of the
Agreement. 

1.With reference to Article 5

It is understood that the term “place of business”
includes also a place of production.

2.With reference to Article 5, paragraph 4, sub-paragraphs (a) and (b)

It is understood that the provisions of Article 5,
paragraph 4, sub-paragraphs (a) and (b) refer also to mere delivery provided that it is not a regular and
not accompanied with sales.

3.With reference to Article 5, paragraph 4

The use of facilities, solely for the purpose of
initial setting up and delivery of machinery or equipment shall not constitute a permanent establishment.

4.With reference to Article 7, paragraph 4

The term “mere purchase” does not include the purchase by such permanent establishment for another
enterprise.

5.With reference to Article 8

The profits of shipping and airline enterprise engaged in international traffic shall include additional
activities closely connected with the direct operation of ships and aircraft.

6.With reference to Article 11, paragraph 5

The term “interest” means also the income assimilated
to income from money lent by the taxation law of the State in which the income arises, including interest
on deferred payments sales.

7.With reference to Article 24, paragraph 4

The Contracting States have, however, the right to limit the debt-equity ratio in accordance with their
domestic laws.

In witness whereof the undersigned, duly authorized
thereto, have signed this Protocol.

Done in duplicate at Jakarta on the l9th day of
October 1989 in the English language.

EXCHANGE OF LETTERS

I

Jakarta, October 19, 1989

Excellency,

I have the honour to refer to the Agreement which was
signed today.

In connection with the Agreement between the
Government of the Hungarian People’s Republic 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 signed
today, the Hungarian People’s Republic acknowledges the fact that when the said Agreement enters into
force, Section 26e of the Indonesian Tax Law will still be applicable in respect of income taxation of
profits of a permanent establishment in Indonesia. However, the foregoing provision will not be applicable
if the taxpayer can produce an evidence that such profit is not transferred or distributed to its parent
company. In case there is any doubt regarding the application of the provisions of this Section
considering the principles contained in the said Agreement, the two Governments shall endeavour to settle
the question by mutual agreement.

If the foregoing is acceptable to the Government of
the Republic of Indonesia, I have the honour to propose that this note together with your confirmatory
reply shall constitute an Agreement between our Governments which shall enter into force on October 19,
1989.

Accept, Excellency, the renewed assurances of my
highest consideration.

Gombocz Zoltan

H. E. Nasrudin Sumintapura

Junior Minister of Finance

II

Jakarta, October 19, 1989

Excellency,

I have the honour to acknowledge receipt of Your
Excellency’s Note of October 19, 1989 which reads as follows:

[See I]

I have further the honour to confirm that the content
of Your Excellency’s Note referred to above is acceptable to my Government and to agree that Your
Excellency’s Note and this reply shall constitute an Agreement between our two governments which shall
enter into force on October 19, 1989.

Accept, Excellency, the renewed assurances of the
highest consideration.

Nasrudin Sumintapura

H. E. Gombocz Zoltan

Secretary of State of the Ministry of Trade

of the Hungarian People’s Republic

Excellency,

1 have the honor to acknowledge receipt of Your
Excellencys Note of October 19, 1989 which reads as follows:

I have the honor to refer to the recent discussion tax
delegations of our two Governments and to inform you as fallows:

In connection with the Agreement between the
Government of the Hungarian People’s Republic 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 signed
today, the Hungarian Peoples Republic acknowledges the fact that when the said Agreement enters into
force, Section 26e of the Indonesian Tax Law will still be applicable in respect of income taxation of
profits of a permanent establishment in Indonesia. However, the foregoing provisions will not be
applicable if the taxpayer can produce an evidence that such profit is not transferred or distributed to
its parent company. Incase there is any doubt regarding the application of the provisions of this Section
considering the principles contained in the said Agreement, the two Governments shall endeavor to settle
the question by mutual agreement.

I have further the honor to confirm that the content
of Your Excellencys Note referred to above is acceptable to my Government and to agree that Your
Excellencys Note and this reply shall constitute an Agreement between our two governments which shall
enter into force on October 19, 1989. Accept, Excellency, the renewed assurances of the highest
consideration.