Pakistan

AGREEMENT BETWEEN
THE GOVERNMENT OF THE REPUBLIK OF INDONESIA
AND
THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF PAKISTAN

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 resident 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 sub-divisions 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 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 :

   (a)	in Pakistan :
   	(i)	the income tax;
   	(ii)	the super tax; and
   	(iii)	the surcharge,
   	(hereinafter referred to as “Pakistan tax”)
   (b)	in Indonesia : the income tax (pajak-penghasilan), (hereinafter referred to as “Indonesian tax”).

4. This Agreement shall also apply to any identical or substantially similar taxes (including surcharge
   in Indonesia) which are imposed after the date of signature of this Agreement in addition to, or in
   place of, the existing taxes 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 within a reasonable period of time after such changes. 

Article 3
GENERAL DEFINITIONS

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

   (a)	the term “Pakistan” used in a geographical sense means Pakistan as defined in the Constitution of the Islamic Republic of Pakistan and includes any area outside the territorial waters of Pakistan which under the laws of Pakistan and international law is an area within which Pakistan exercises sovereign rights and exclusive jurisdiction with respect to the natural resources of the sea-bed and sub-soil and superjacent waters;
   (b)	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;
   (c)	the terms “a Contracting State” and “the other Contracting State” mean Pakistan or Indonesia, as the context requires;
   (d)	the term “tax” means Pakistani tax or Indonesian tax, as the context requires;
   (e)	the term “person” includes an individual, a company and any other body of persons;
   (f)	the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
   (g)	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;
   (h)	the term “national” means all individuals having the nationality of a Contracting State and all legal persons, partnerships and other bodies of persons deriving their status as such from the law in force in a Contracting State;
   (i)	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;
   (j)	the term “competent authority” means, in the case of Pakistan, the Central Board of Revenue or its authorised representative, in the case of Indonesia, the Minister of Finance or his authorised representative.

2. As regards the application of this 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 the
   Contracting State concerning the taxes to which this 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 Contracting State, is liable to tax therein by reason of his domicile,
   residence, place of effective 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 be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting 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 Contracting 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 Contracting 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, then it shall be deemed to be a resident of the Contracting State in which
   the place of effective management of its business is situated. However, where the place of effective
   management of the business of such person cannot be determined, then the competent authorities of the
   Contracting States shall determine by mutual agreement the State of which the said person shall be
   deemed to be a resident for the purposes of this 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” means 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 warehouse;
   (h)	a permanent sales exhibition; and
   (i)	premises for receiving and soliciting orders.

3. The term “permanent establishment” likewise encompasses a building site, a construction, assembly or
   installation project or supervisory activities in connection therewith, but only where such site,
   project or activities continue for a period of more than three months. 

4. Notwithstanding the provisions of paragraphs 1 to 3, 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 or for similar activities which have a preparatory or auxiliary character, for the enterprise and which are performed free of charge and not for the purpose of profits.

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 of such person 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 this paragraph; or
   (b)	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.

6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting
   State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the
   other Contracting State if it collects premiums in the territory of that other State or insures risks
   situated therein through a person other than an agent of an independent status to whom paragraph 7
   applies. 

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 Contracting 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 property (including income from
   agriculture and 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 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 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 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 attributable 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. 

4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a
   permanent establishment on the basis of an apportionment of the total profits of the enterprise to its
   various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the
   profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted
   shall, however, be such that the result shall be in accordance with the principles contained in this
   Article. 

5. 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 head office of the enterprise. 

6. For the purposes of paragraphs 1 to 5, 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. 

7. 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 of aircraft in international
   traffic should be taxable in that State. 

2. Profits from sources with a Contracting State derived by an enterprise of the other Contracting State
   from operation of ships may be taxed in the first-mentioned State in accordance with its domestic law.
   The profits from sources with a Contracting State shall consist of the amount paid or payable to, or
   received or deemed to be received, by the enterprise of the other Contracting State, or on its behalf,
   on account of carriage of passengers, livestock, mail or goods shipped at any port of the
   first-mentioned State. 

3. 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 other Contracting 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
   enterprise of the first- mentioned State if the conditions made between the two enterprises had been
   those which would have been made between independent enterprises, then that other Contracting State
   shall make an appropriate adjustment to the amount of tax charged thereon on those profits. In
   determining such adjustment, due regard shall be had to the other provisions of this Agreement and the
   competent authorities of the Contracting States shall, if necessary, 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 Contracting 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 Contracting State, but if the recipient is
   the beneficial owner of the dividends the tax so charged shall not exceed:

   (a)	10% of the gross amount of the dividends if the recipient is a company which owns directly at least 25% of the capital of the company paying the dividends;
   (b)	15% of the gross amount of the dividends in all other cases.
   The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares and 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 Article 7 or Article 15, 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 Contracting 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 Contracting 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 Contracting 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 such other
   Contracting State.

6. Notwithstanding any other provision 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 10% 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 Contracting State.

2. However, such interest may also be taxed in the Contracting State in which it arises, and according to
   the laws of that Contracting 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. 

3. Notwithstanding the provisions of paragraphs 1 and 2, interest arising in a Contracting State shall be
   exempt from tax in that State if it is derived and beneficially owned by: 

   (i)	the Government of the other Contracting State or subject to the agreement of the competent authorities, a local authority thereof or any agency or instrumentality of that State;
   (ii)	the Central Bank of the other Contracting State.

4. The term “interest” as used in this Article means income from debt-claims of every kind including
   interest on deferred payment sales, 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. Penalty charges for late payment shall not be regarded as interest for the purpose of this
   Article. 

5. The provisions of paragraphs 1, 2 and 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
   Contracting 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 15, as the case may
   be, shall apply. 

6. Interest shall be deemed to arise in a Contracting State when the payer is the Government of that
   Contracting State, a local authority thereof or a resident of that Contracting 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 that 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. 

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, know-how,
   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 in which the royalties arise, through a permanent establishment
   situated therein, or performs in that other Contracting 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 case, the provisions of
   Article 7 or Article 15, as the case may be, shall apply. 

5. Royalties shall be deemed to arise in a Contracting State when the payer is the Government of that
   Contracting State, a local authority thereof or a resident of that Contracting State. Where 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 Contracting 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
FEES FOR TECHNICAL SERVICES

1. Fees for technical services arising in a Contracting State and paid to an enterprise of the other
   Contracting State may be taxed in that other State. 

2. However, such fees for technical services 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 thereof,
   the tax so charged shall not exceed 15% of the gross amount of the fees.

3. The term “fees for technical services” as used in this Article means any consideration (including any
   lump sum consideration) for the provision of or rendering of any managerial, technical or consultancy
   services (including the provision by the enterprise of the services of technical or other personnel)
   but does not include consideration for any activities mentioned in sub-para (3) of paragraph 5 or
   consideration which would be income falling under Article 15 of the Agreement. 

4. The provisions of paragraphs 1 and 2 do not apply if the beneficial owner of the fees for technical
   services, being a resident of a Contracting State, carries on business in the other Contracting State
   in which the fees for technical services rise, through a permanent establishment situated therein, or
   performs in that other State independent personal services from a fixed base situated therein and the
   contract in respect of which the fees for technical services are paid is effectively connected
   with: 

   (a)	such permanent establishment or fixed base, or
   (b)	business activities referred to under (c) of paragraph (1) of Article 7.
   In such cases the provisions of Article 7 or Article 15, as the case may be, shall apply.

5. Fees for technical services shall be deemed to arise in a Contracting State when the payer is that
   State itself, a political sub-division, a local authority or a resident of that State, and the
   services are rendered for the said payer or the services are rendered in that State. Where, however,
   the person paying the fees for technical service 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
   obligation to make the payments was incurred, and the payments are borne by such permanent
   establishment, then such fees for technical services shall be deemed to arise in the State in which
   the permanent establishment 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 fees for technical services exceeds the amount which
   would have been paid 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 14
CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property as
   defined in Article 6 or from the alienation of shares in a company the assets of which consist
   principally of such property, may be taxed in the Contracting State in which the said property is
   situated. 

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 together with the whole
   enterprise) or of such a fixed base, may be taxed in that other Contracting 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 derived by a resident of a Contracting State from the alienation of any property other than that
   referred to in paragraphs 1 to 3 and arising in the other Contracting State may be taxed in that other
   Contracting State. 

Article 15
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 except in one of the
   following circumstances, when such income may also be taxed in the other Contracting State: 

   (a)	if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or
   (b)	if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in any twelve-month period; in that case only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other Contracting State; or
   (c)	if the remuneration for his activities in the other Contracting State is paid by a resident of that Contracting State or is borne by a permanent establishment or a fixed base situated in that Contracting State, in that case, only so much of the remuneration as derived therefrom may be taxed in that other Contracting State.

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 16
DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 17, 19, 20 and 22, 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
   Contracting 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 Contracting State for a period or periods not exceeding in the aggregate 90 days in any twelve-month period concerned; and
   (b)	the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Contracting State; and
   (c)	the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Contracting State.

3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, remuneration derived in respect
   of an employment exercised aboard a ship or aircraft operated by an enterprise of a Contracting State
   in international traffic shall be taxable only in that State. 

Article 17
DIRECTORS’ FEES

1. 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 of a similar organ of a company which is a resident
   of the other Contracting State may be taxed in that other State. 

2. Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his
   capacity as an official in a top-level managerial position of a company which is a resident of the
   other Contracting State may be taxed in that other Contracting State. 

Article 18
ARTISTES AND ATHLETES

1. Notwithstanding the provisions of Articles 15 and 16, 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 personal activities as such exercised in the other Contracting State,
   may be taxed in that other Contracting 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, 15 and 16, 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 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. 

Article 19
PENSIONS AND ANNUITIES

1. Any pension, other than a pension referred to in paragraph 2 of Article 20, or any annuity derived by
   a resident of a Contracting State from sources within the other Contracting State may be taxed only in
   the first-mentioned Contracting State.

2. Notwithstanding the provisions of paragraph 1, pensions paid out of a pension fund approved by the
   Government of a Contracting State (or its authorised Agency) to a resident of the other Contracting
   State in consideration of past employment may be taxed in the first-mentioned State. 

3. The term “pension” means a periodic payment made in consideration of past services or by way of
   compensation for injuries received in the course of performance of services. 

4. The term “annuity” means a stated sum payable periodically at stated times during life or during a
   specific 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. T

Article 20
GOVERNMENT SERVICE

Article 21
TEACHERS AND RESEARCHERS

1. An individual who is, or immediately before visiting a Contracting State, was a resident of the other
   Contracting State and is present in the first-mentioned Contracting State for the primary purpose of
   teaching, giving lectures or conducting research at a university, college, school or educational
   institution or scientific research institution accredited by the Government of the first- mentioned
   State shall be exempt from tax in the first-mentioned Contracting State, for a period of two years
   from the date of his first arrival in the first-mentioned Contracting State, in respect of
   remuneration for such teaching, lectures or research, or income received by him from sources outside
   the first-mentioned Contracting State.

2. This Article shall not apply to income from research if such research is undertaken primarily for the
   private benefit of a specific person or persons.

Article 22
STUDENTS AND TRAINEES

Article 23
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 Contracting 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 Contracting 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 15, 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 Contracting State. 

Article 24
METHODS FOR ELIMINATION OF DOUBLE TAXATION

1. In Pakistan double taxation shall be eliminated as follows :
   Subject to the provisions of the laws of Pakistan, regarding the allowance as a credit against
   Pakistan tax, the amount of Indonesian tax payable, under the laws of Indonesia and in accordance with
   the provisions of this Agreement, whether directly or by deduction, by a resident of Pakistan, in
   respect of income from sources within Indonesia which has been subject to a tax both in Pakistan and
   Indonesia shall be allowed as a credit against the Pakistan tax payable in respect of such income but
   in an amount not exceeding that proportion of Pakistan tax which such income bears to the entire
   income chargeable to Pakistan tax.

2. In Indonesia, double taxation shall be eliminated as follows :
   Where a resident of Indonesia derives income from Pakistan and such income may be taxed in Pakistan in
   accordance with the provisions of this Agreement, the amount of Pakistan 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. Notwithstanding anything contained in the foregoing paragraphs 1 and 2, where any profits, income or
   chargeable gains are not subject to tax or are taxed at a reduced rate in one of the Contracting
   States by virtue of any exemption or concession allowed under the laws of that State or in accordance
   with this Agreement and the same profits, income or chargeable gains are subject to tax in the other
   Contracting State, credit shall be allowed in the later mentioned State for the whole of the tax,
   which would have been payable on the said profits, income or chargeable gains had the same profits,
   income or chargeable gains not been exempted from tax or had it not been taxed at a reduced rate in
   the first-mentioned State. 

Article 25
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 Contracting State in the same circumstances
   are or may be subjected. The provisions of this paragraph 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 Contracting State than the
   taxation levied on enterprises of that other Contracting State carrying on the same activities. The
   provisions of this paragraph 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
   resident. 

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 the first-mentioned State are or may be subjected. 

5. Nothing contained in the preceding paragraphs of this Article shall be construed: 

   (i)	as obliging either Contracting State, to grant to persons notresident in its territory those personal allowances and reliefs for tax purposes which are by law available only to persons who are so resident;
   (ii)	as affecting any provision of the law of either Contracting State regarding the imposition of tax on a non-resident person; or
   (iii)	as affecting any provision of the law of Pakistan regarding the grant of rebate of tax to companies fulfilling specific requirements regarding the declaration and payment of dividends.

Article 26
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 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 this 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 provisions of this Agreement. Any agreement reached shall be implemented
   notwithstanding any time limits in the domestic law of the Contracting State. 

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 this
   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
   shall through consultations develop appropriate bilateral procedures, conditions, methods and
   techniques for the implementation of the mutual agreement procedure provided for in this
   Article. 

Article 27
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 this
   Agreement, in particular for the prevention of 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 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 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 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 of which would be contrary to public policy (ordre public).

Article 28
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 29
ENTRY INTO FORCE

1. This Agreement shall enter into force on the later of the dates on which the respective Governments
   may 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 Pakistan
   	(i)	in respect of tax withheld at the source on amounts paid or credited to non-residents on or after the first day of July of the year in which the Agreement enters into force; and
   	(ii)	in respect of other taxes for assessment years beginning on or after the first day of July in which the Agreement enters into force;
   (b)	In Indonesia :
   	(i)	in respect of tax withheld at the source on or after the first day of January of the year in which the Agreement enters into force; and
   	(ii)	in respect of other taxes for assessment years beginning on or after the first day of January of the year in which the Agreement enters into force.

Article 30
TERMINATION

Done at Islamabad on the Seventh day of October, 1990 in the English language.