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Saudi Arabia

Indonesia has established tax treaties with Saudi Arabia to prevent double taxation and encourage cross-border investments. See detailed information on Indonesia-Saudi Arabia tax treaties below.

AGREEMENT BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE KINGDOM OF SAUDI ARABIA

FOR
RECIPROCAL EXEMPTION OF TAXES AND CUSTOMS DUTIES ON THE
ACTIVITIES OF AIR TRANSPORT ENTERPRISES OF THE TWO COUNTRIES

Article 1
TAXES AND DUTIES COVERED

  1. This Agreement shall apply to
    taxes
    on income imposed on behalf of each 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 property and
    taxes on the total amounts of wages or salaries paid by
    enterprises. 

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

    (a) in the
    case of the Republic of Indonesia
    (i) Corporate
    income tax;
    (ii) Individual
    income tax and other taxes on income imposed under the Law No. 7 of
    1983;
    (hereinafter referred to as “Indonesian tax”);
    (b) in the case of the Kingdom of Saudi
    Arabia 
    (i) Corporate
    income tax;
    (ii) Individual
    income tax and other taxes on income
    (hereinafter referred to as “Saudi Tax”);

  4. This Agreement shall also apply
    to
    any identical or substantially similar taxes as are subsequently
    imposed in addition to, or in place of the existing taxes covered by
    this Agreement.

  5. The two Contracting States
    undertake to extend exemption on all equipments mentioned in the
    schedule A and B annexed hereto imported in or exported from a
    Contracting State for the own use of the air transport enterprises of
    the other Contracting State from customs duties and charges. This list
    may be modified in writing by mutual consent. 

Article 2
DEFINITIONS

In this Agreement, unless the
context
otherwise requires:

(a)

the terms “a Contracting
State”
and “the other Contracting State” mean the Republic of Indonesia or the
Kingdom of Saudi Arabia, as the context requires;
(b)

the terms “air transport
enterprise of a Contracting State” and the “air transport enterprise of
the other Contracting State” mean:
(i)

in the case of Saudi Arabia, the Saudi
Arabian Airlines
Corporation or its successors;
(ii)

in the case of the Republic of Indonesia,
Garuda
Indonesia or its successors;
(c)

the term “exercise of air
transport” means the operational activity of transportation by air of
persons, animals, goods and mail conducted by an enterprise of a
Contracting State including sale of tickets and similar documents used
for the purpose of transport;
(d)

the term “international
traffic”
means any transport by aircraft, owned, leased or chartered, operated
by an enterprise of a Contracting State, except when such transport is
made solely between places in the other Contracting State;
(e)

the term “competent
authority”
means:
(i)

in the case of the Republic of Indonesia,
the Minister
of Finance or his authorized representative;
(ii)

in the case of the Kingdom of Saudi Arabia,
the Ministry
of Finance and National Economy; or its authorized representative;
(f)

the term “resident of a
Contracting State” means any person, who under the law of that State,
is liable to taxation therein by reason of his domicile, residence, or
any other criterion of a similar nature;
(g)

the term “person” includes
an
individual, a corporation, a company or any other body or
persons; 
(h)

the term “other payments”
means
social security insurance, old age annuity or pension, sickness or
medical insurance, unemployment insurance or any other payments
measured by income levied on the salaries and allowances of the
employees by the law of the Contracting State.

Article 3
AIR TRANSPORT

  1. Income and profits derived by
    the
    air transport enterprise of a Contracting State from the exercise of
    air transport in international traffic shall be exempted from taxes in
    the other Contracting State.

  2. The provisions of paragraph 1
    shall
    also apply to income and profits derived by the air transport
    enterprise of a Contracting State from its participation in a pool or a
    joint business with the designated airline of the other State as
    referred to in Article 2 paragraph (b).

  3. For the purposes of this
    Article,
    income and profits derived by air transport enterprise of a Contracting
    State, from the exercise of air transport in international traffic also
    include income and profits derived from:

    (a)

    the rental, lease or maintenance of
    aircraft; 
    (b)

    training schemes, management and other
    services
    rendered by an air transport enterprise of one Contracting State to the
    air transport enterprise of the other Contracting State. 

Article 4
REMUNERATION FOR PERSONAL SERVICES

  1. Remuneration derived in respect
    of
    an employment exercised on board of an aircraft operated in
    international traffic by the air transport enterprise of a Contracting
    State, shall be taxable only in that State.

  2. Remuneration derived by an
    employee
    of an air transport enterprise of a Contracting State in respect of
    employment exercised in the other Contracting State shall, in
    accordance with the laws and regulations in force of each Contracting
    State, be exempted from the taxes and the other payments in that other
    State unless he is a national of that other Contracting State.

Article 5
MUTUAL AGREEMENT PROCEDURE

Consultation
may be requested at any time by either Contracting State for the
purpose of amendment to the present Agreement or for its application or
its interpretation. Such consultation shall begin within 60 days from
the date of receipt of any such request and decisions shall be made by
mutual consent.

Article 6
ENTRY INTO FORCE

  1. This Agreement shall be ratified
    and the instruments of ratification shall be exchanged in due course of
    time.

  2. The Agreement shall enter into
    force upon the exchange of instruments of ratification and its
    provisions shall have effect, in a Contracting State, on any income
    arising on or after the first day of January 1989.

  3. The Protocol shall form an
    integral
    part of this Agreement. 

Article 7
TERMINATION

This
Agreement shall remain in force indefinitely but can be terminated by
either Contracting State by giving notice of termination at least six
months before the end of any calendar year, in which case, this
Agreement shall cease to have effect from the end of the calendar year
in which the notice of termination is given.

In
witness whereof the undersigned duly authorized thereto by their
respective Governments, have signed this Agreement in the Arabic,
Bahasa Indonesia and English languages. In case of dispute, the English
text will prevail.
 
Done in Riyadh, on
Saturday, the 9th of March 1991 corresponding to the 23 Shaban 1411H.

FOR THE GOVERNMENT OF THE
REPUBLIC OF INDONESIA,
AMBASSADOR OF THE REPUBLIC OF INDONESIA
sgd
E. SOEKASAH SOMAWIDJAJA

FOR THE GOVERNMENT OF
KINGDOM OF SAUDI ARABIA,
MINISTER OF FINANCE AND NATIONAL ECONOMY
sgd
MOHAMMED ABALKHAIL

PROTOCOL

It
is understood that prior to the initialling of the Agreement for the
Reciprocal Exemption of Taxes and Custom Duties on the Activities of
Air Transport Enterprises between the Government of the Kingdom of
Saudi Arabia and the Government of the Republic of Indonesia, tax
authorities of both countries have either issued tax assessment or
enforced collection of tax on income derived by airlines of both
countries.
 

The Saudi Delegation raised the problem of taxes imposed on GARUDA
since 1977 and at the same time the Indonesian Delegation also raised
the amount of taxes imposed on Saudia in indonesia since 1985.

 

It is understood that the effective date of the Agreement is the 1st of
January 1989. However, it will also be applicable to any taxable years
beginning from 1st January 1985.

 

Both air transport enterprises (GARUDA and SAUDIA) will solve their tax
problems that arose before 1985 with tax authorities of both countries.

FOR THE GOVERNMENT OF THE
REPUBLIC OF INDONESIA ,
AMBASSADOR OF THE REPUBLIC OF INDONESIA
sgd
E. SOEKASAH SOMAWIDJAJA

FOR THE GOVERNMENT OF
KINGDOM OF SAUDI ARABIA,
MINISTER OF FINANCE AND NATIONAL ECONOMY
sgd
MOHAMMED ABALKHAIL

SCHEDULE

Ground Equipment and Material to be exempted from
Customs
Duties:

A.

CARS AND EQUIPMENT
  1. Carts — for transport of luggage and
    consignments
    (in/out Airport)
  2. Loading/unloading Equipment — small
    cranes
  3. Pull cars-inside airport.
    (Items No. 1, 2 and 3 subject to the approval of the Minister of Trade).
  4. Spare parts – for equipment listed
    herein.
  5. House furniture and equipments for
    employees.
  6. Office furniture and equipment.
  7. Luggage Tags – different.
  8. Catering utensils Butages, Dishes, Trays
    and Cups
    etc.
  9. Tickets and Consignments notes (valuable
    documents).
  10. Maintenance and repairing equipment.
  11. Air-conditioning units (only used inside
    airport).
  12. Communication Apparatuses (subject to
    approval of
    Minister of Tourism, Post and Telecommunication).
B.

ADVERTISING AND SALES
PROMOTION
MATERIALS

  1. Wall Calendar
  2. Desk and Pocket Diaries
  3. Desk Sets
  4. Hand Bags
  5. Watches
  6. Lighters
  7. Pens – different
  8. Ash-Trays
  9. Key Chains
  10. Schedules/Pen Holders
  11. Purses
  12. Flags – different kinds of sizes
  13. Aircraft models
  14. Posters
  15. Leaflets
  16. Passport Covers
  17. Stationary items

ALL SHOULD BEAR AIRLINE’S MOTTO/SYMBOL

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