Italy

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

FOR
THE
AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF FISCAL EVASION

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, 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 the case of Indonesia : the income tax and, to the extent provided in such income tax, the company tax imposed under the Ordinansi Pajak Perseroan 1925 (State Gazette Number 319 Year 1925 as lastly amended by Law Number 8 Year 197O) and the tax imposed under the Undang-undang Pajak atas Bunga, Dividen dan Royalti 1970 (Law Number 10 Year 1970); whether or not they are collected by withholding at source, (hereinafter referred to as “Indonesian tax”)
   (b)	in the case of Italy :
   	(i)	the personal income tax (l’imposta sul reddito delle persone fisiche);
   	(ii)	the corporate income tax (l’imposta sul reddito delle persone giuridiche);
   	whether or not they are colleded by withholding at source, (hereinafter referred to as “Italian tax”).

4. The 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, the existing taxes. The competent authorities of the
   Contracting States shall notify each other of any significant 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 “Italy” means the Italian Republic and includes any area beyond the territorial waters of Italy which, in accordance with the laws of Italy concerning the exploration and exploitation of natural resources, may be designated as an area within which the rights of Italy with respect to the seabed and subsoil and natural resources may be exercised;
   (b)	the terms “a Contracting State” and “the other Contracting State” mean Indonesia or Italy 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 on by a 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 an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
   (g)	the term “nationals” means:
   	(i)	all individuals possessing the nationality of a Contracting State;
   	(ii)	all legal persons, partnerships and associations deriving their status as such from the laws in force in a Contracting State;
   (h)	the term “competent authority” means:
   	(i)	in the case of Indonesia : the Minister of Finance or his authorized representative;
   	(ii)	in the case of ltaly : the Ministry of Finance.

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 laws 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 situated 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 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 State, then it
   shall be deemed to be a resident of the State in which its place of effective management is situated.

Article 5
PERMANENT ESTABLISHMENT

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

2. The term “permanent establishment”
   shall include especially :

   (a)	a place of management;
   (b)	a branch;
   (c)	an office;
   (d)	a factory;
   (e)	a workshop;
   (f)	a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;
   (g)	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 six months;
   (h)	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 three months within any twelve-month period.

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

   (a)	the use of the facilities solely or the purpose of storage or display of goods 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 which have a preparatory or auxiliary character, for the enterprise.

4. A person acting in a Contracting
   State on behalf of an enterprise of the other Contracting State – other than an agent of an
   independent status to whom paragraph 6 applies – shall be deemed to be a permanent establishment in
   the first-mentioned State if:

   (a)	he has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities are limited to the purchase of goods or merchandise for the enterprise; or
   (b)	he has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.

5. 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 6. 

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, where 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.

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 State.

2. The term “immovable property”
   shall be defined in accordance with 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 shall also be considered as “immovable property”. 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 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 PROFIT

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. 

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

Where:

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: 

   (a)	10 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;
   (b)	15 per cent of the gross amount of the dividends in all other cases. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations. This provision 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, “jouissance” shares or “jouissance” rights, mining shares,
   founders’ 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 law 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 dividends are taxable in that other Contracting State according to its own law.

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. 

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 12% of the amount of such profits after deducting therefrom income tax
   and other taxes on income imposed thereon in that other State. 

7. The provisions of paragraph 6 of
   this Article shall not affect the provisions contained in any production sharing contracts and
   contracts of work (or any other similar contracts) relating to the oil and gas sector or other mining
   sector concluded on or before 31 December 1983, 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
   Italy. 

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 shall be exempt frorn tax in that state if :

   (a)	the payer of the interest is Government of that Contracting State of local authority thereof; or
   (b)	the interest is paid to the Government of the other Contracting State or local authority thereof or any agency or instrumentality (including a financial institution) wholly owned by that other Contracting State or local authority thereof; or
   (c)	the interest is paid to any other agency or instrumentality (including a financial institution) in relation to loans made in application of an agreement concluded between the Governments of the Contracting States.

4. The term “interest” as used in
   this Article means income from Government securities, bonds or debentures, whether or not secured by
   mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind
   as well as all other income assimilated to income from money lent by the taxation law of the State in
   which the income arises. 

5. The provisions of paragraphs 1 to
   3 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 a case, the interest is
   taxable in that other Contracting State according to its own law. 

6. Interest shall be deemed to arise in a Contracting State when the payer is that
   State itself, a political or administrative 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 Contracting State in which the permanent establishment or fixed base is situated.

7. 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 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 :

   (a)	10 per cent of the gross amount of the royalties in respect of payments of any kind received as a consideration for the use of, or the right to use industrial, commercial or scientific equipment, or for information concerning industrial, commerciall or scientific experience;
   (b)	15 per cent of the gross amount of the royalties in all other cases.
   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 copyrights 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 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 such permanent establishment or fixed base. In such a case, the royalties
   are taxable in that other Contracting State according to its own law. 

5. Royalties shall be deemed to arise
   in a Contracting State when the payer is that State itself, a political or administrative 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 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 aggregating 90 days in any twelve months’ period. 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, 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 the other State for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned; 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 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 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. 

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 political or administrative
   subdivision, a local authority or public institution thereof. 

Article 18
PENSIONS

Article 19
GOVERNMENT SERVICE

Article 20
TEACHER AND RESEARCHERS

Article 21
STUDENTS

Article 22
OTHER INCOME

Article 23
ELIMINATION OF DOUBLE TAXATION

1. It is agreed that double taxation
   shall be avoided in accordance with the following paragraphs of this Article.

2. Where a resident of Indonesia
   derives income from Italy and such income may be taxed in Italy in accordance with the provisions of
   this Agreement, the amount of Italian 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.

3. If a resident of Italy owns items
   of income which are taxable in Indonesia, Italy, in determining its income taxes specified in Article
   2 of this Agreement, may include in the basis upon which such taxes are imposed the said items of
   income, unless specific provisions of this Agreement otherwise provide. 
   In such a case, Italy shall deduct from the taxes so calculated the income tax paid in Indonesia but
   in an amount not exceeding that proportion of the aforesaid Italian tax which such items of income
   bear to the entire income.
   However, no deduction will be granted if the item of income is subjected in Italy to a final
   withholding tax by request of the recipient of the said income in accordance with the Italian law.

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 that 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. Except where the provisions of
   Article 9, paragraph 7 of Article 11, or paragraph 6 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 such enterprise, be
   deductible under the same conditions as if they had been paid to a resident of the first-mentioned
   State. 

4. 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 that first-mentioned State
   are or may be subjected.

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, notwithstanding 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 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 the
   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. 

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. When it seems advisable in order to reach agreement to have
   an oral exchange of opinions, such exchange may take place through a Commission consisting of
   representatives of the competent authorities of the Contracting States. 

Articie 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 this
   Agreement insofar as the taxation thereunder is not contrary to the Agreement as well as to prevent
   fiscal evasion. 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 covered by 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 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 or the 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 of which would be contrary to public policy (ordre public).

Article 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS

Article 28
REFUNDS

1. Taxes withheld at source in a
   Contracting State will be refunded by request of the taxpayer or of the State of which he is a
   resident if the right to collect the said taxes is affected by the provisions of this Agreement.

2. Claims for refund, that shall be
   produced within the time limit fixed by the law of the Contracting State which is obliged to carry out
   the refund, shall be accompanied by an official certificate of the Contracting State of which the
   taxpayer is a resident certifying the existence of the conditions required for being entitled to the
   application of the allowances provided for by this Agreement. 

3. The competent authorities of the
   Contracting States shall by mutual agreement settle the mode of application of this Article, in
   accordance with the provisions of Article 25 of this Agreement. 

Article 29
ENTRY INTO FORCE

1. This Agreement shall be ratified
   and the instruments of ratification shall be exchanged at Rome as soon as possible. 

2. This Agreement shall enter into
   force upon the exchange of instruments of ratification and shall have effect: 

   (a)	in Indonesia : in respect of income derived on or after 1 January of the year next following that of the entry into force of the Agreement.
   (b)	in Italy : in respect of income assessable for any taxable period commencing on or after 1 January of the year next following that of the entry into force of the Agreement.

Article 30
TERMINATION

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

DONE in duplicate at Jakarta on the
18th day of February 1990 in the Italian, Indonesian and English languages, all the texts being equally
authoritative, except in the case of doubts, when the English text shall prevail.