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Vietnam

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

AGREEMENT BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIETNAM

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

Article 1
PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2
TAXES COVERED

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

  2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of
    income, including taxes on gains from the alienation of movable or immovable property, [and] taxes on
    the total amounts of wages or salaries paid by enterprises..

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

    (a) in Indonesia:
    the income tax imposed under the Income Tax Law 1984 (Law no. 7 of 1983 as amended);
    (hereinafter referred to as “Indonesian tax”);
    (b) in Vietnam:
    (i) the personal income tax;
    (ii) the profit tax; and
    (iii) the profit remittance tax
    (hereinafter referred to as “Vietnamese 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 substantial changes
    which have been made in their respective taxation laws.

Article 3
GENERAL DEFINITIONS

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

    (a)

    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 sovereignty, sovereign
    rights or jurisdiction in accordance with the provisions of the United Nations Convention on
    the Law of the Sea, 1982;
    (b)

    the term “Vietnam” means the Socialist Republic of Vietnam; when used in a geographical sense,
    it means all its national territory, including its territorial sea and any area beyond and
    adjacent to its territorial sea, within which Vietnam by Vietnamese legislation and in
    accordance with international law, has sovereign rights or exploration for and exploitation of
    natural resources of the seabed and its subsoil and superjacent waters;
    (c)

    the terms “a Contracting State” and “the other Contracting State” mean Vietnam or Indonesia,
    as the context requires;
    (d)

    the term “person” includes an individual, a company and any other body of persons;
    (e)

    the term “company” means any body corporate or any entity which is treated as a body corporate
    for tax purposes;
    (f)

    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;
    (g)

    the term “national” means:
    (i)

    any individual possessing the nationality of a Contracting State;
    (ii)

    any legal person, partnership and association deriving its status as such from the laws in
    force in a Contracting State;
    (h)

    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; and
    (i)

    the term “competent authority” means:
    (i)

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

    in the case of Vietnam, the Minister of Finance or his authorized representative.

  2. As regards the application of the Agreement by a Contracting State any term not defined therein shall,
    unless the context otherwise requires, have the meaning which it has under the law of that State
    concerning the taxes to which the Agreement applies.

Article 4
RESIDENT

  1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who,
    under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of
    management, or any other criterion of a similar nature. But this term does not include any person who
    is liable to tax in that State in respect only of income from sources in that State or capital
    situated therein.

  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 does
    not have 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, he shall be deemed to be a
    resident of the State of which he is a national;
    (d)

    if he is a national of both States or of 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 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
    through which the business of the enterprise is wholly or partly carried on.

  2. The term “permanent establishment” includes especially:

    (a) a place of management;
    (b) a branch;
    (c) an office;
    (d) a factory;
    (e) a workshop;
    (f) a warehouse or premises used as sales outlet;
    (g) a farm or plantation;
    (h)

    a mine, an oil or gas well, a quarry or any other place of extraction or exploration of
    natural resources, drilling rig or working ship or installation structure, or equipment used
    for the ploration or exploitation of natural resources.

  3. The term “permanent establishment” likewise encompasses:

    (a)

    a building site, construction, assembly or installation project of supervisory activities in
    nnection therewith, but only where such site, project or activities continue for a period of
    more an six months;
    (b)

    the furnishing of services, including consultancy services, by an enterprise through employees
    or other personnel engaged by the enterprise for such purpose, but only where activities of
    that nature continue (for the same or a connected project) within the country for a period or
    periods aggregating more than three months within any 12-month period.

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

    (a)

    the use of 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, or for the
    supply of information;
    (f)

    the maintenance of a fixed place of business solely for the purpose of carrying on, for the
    enterprise, any other activity of a preparatory or auxiliary character;
    (g)

    the maintenance of a fixed place of business solely for any combination of activities
    mentioned in sub-paragraphs (a) to (f), provided that the overall activity of the fixed place
    of business resulting from this combination is of a preparatory or auxiliary character.

  5. Notwithstanding the provisions of paragraphs 1 and 2, where a person — other than an agent of an
    independent status to whom paragraph 7 applies — is acting in a Contracting State on behalf of an
    enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent
    establishment in the first-mentioned Contracting State in respect of any activities which that person
    undertakes for the enterprise, if such a person:

    (a)

    has and habitually exercises in that State an authority to negotiate and 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 that paragraph;

    (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; or
    (c)

    manufactures or processes in that State for the enterprise goods or merchandise belonging to
    the enterprise.

  6. An insurance enterprise of a Contracting State shall, except in regard to reinsurance, 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 an employee or through a representative
    who is not an agent of an independent status within the meaning of paragraph 7.

  7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely
    because it carries on business in that 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 or forestry) situated in the other Contracting State may be taxed in that other State.

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

  3. The provisions of paragraph 1 shall also apply to the 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 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 business of the permanent establishment, including
    executive and general administrative expenses so incurred, whether in the State in which the permanent
    establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of
    amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent
    establishment to the head office of the enterprise of any of its other offices, by way of royalties,
    fees or other similar payments in return for the use of patents or other rights, or by way of
    commission, for specific services performed or for management, or, except in the case of a banking
    enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account
    shall be taken, in the determination of the profits of a permanent establishment, for amounts charged
    (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head
    office of the enterprise or any of its other offices, by way of royalties, fees or other similar
    payments in return for the use of patents or other rights, or by way of commission for specific
    services performed or for management, or, except in the case of a banking enterprise by way of
    interest on moneys lent to the head office of the enterprise or any of its other offices.

  4. Nothing in this Article shall affect the application of any law of a Contracting State relating to the
    determination of the tax liability of a person in cases where the information available to the
    competent authority of that State is inadequate to determine the profits to be attributed to a
    permanent establishment, provided that law shall be applied, so far as the information available to
    the competent authority permits, consistently with the principles of this Article.

  5. 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 such 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.

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

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

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

Article 9
ASSOCIATED ENTERPRISES

  1. Where

    (a)

    an enterprise of a Contracting State participates directly or indirectly in the management,
    control or capital of an enterprise of the other Contracting State, or
    (b)

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

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

  3. A Contracting State shall not change the profits of an enterprise in the circumstances referred to in
    paragraph 2 after the expiry of the time limits provided in its tax laws.

Article 10
DIVIDENDS

  1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other
    Contracting State may be taxed in that other State.

  2. However such dividends may also be taxed in the Contracting State of which the company paying the
    dividends is a resident and according to the laws of that State, but if the recipient is the
    beneficial owner of the dividends the tax so charged shall not exceed 15 per cent of the gross amount
    of the dividends.
    This paragraph shall not affect the taxation of the company in respect of the profits out of which the
    dividends are paid.

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

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

  5. Notwithstanding any other provisions of this Agreement, where a company which is 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 per cent of the amount of such profits
    after deducting therefrom income tax and other taxes on income imposed thereon in that other State.

  6. The rate of tax in paragraph 2 and in paragraph 5 of this Article shall not affect the rate of tax
    applied in any production sharing contracts or any other similar contracts relating to [the] oil and
    gas sector or other mining sector concluded by the Government of a Contracting State, its
    instrumentality, its relevant state oil and gas company or any other entity thereof with a person who
    is a resident of the other Contracting State.

  7. 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 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 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 State.

Article 11
INTEREST

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

  2. However, such interest may also be taxed in the Contracting State in which it arises, and according to
    the laws of that State, but if the recipient is the beneficial owner of the interest the tax so
    charged shall not exceed 15 per cent of the gross amount of the interest. The competent authorities of
    the Contracting States shall by mutual agreement settle the mode of application of this limitation.

  3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and derived by
    the Government of the other Contracting State, including local authorities thereof, a political
    subdivision, the Central Bank or any financial institution controlled by that Government, the capital
    of which is wholly owned by the Government of the other Contracting State, as may be agreed upon from
    time to time between the competent authorities of the Contracting State, shall be exempt from tax in
    the first-mentioned State.

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

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

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

  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 Contracting 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 per cent of the gross amount of such royalties. The competent authorities
    of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

  3. The term “royalties” as used in this Article means payments, whether periodical or not, and in
    whatever form or name or nomenclature to the extent to which they are made as consideration for:
     

    (a)

    the use of, or the right to use, any copyright, patent, design or model, plan, secret formula
    or process, trademark or other like property or right; or

    (b)

    the use of, or the right to use, any industrial, commercial or scientific equipment; or

    (c)

    the supply of scientific, technical, industrial or commercial knowledge or information; or

    (d)

    the supply of any assistance that is ancillary and subsidiary to any such property or right as
    is mentioned in subparagraph (a), any such equipment as is mentioned in subparagraph (b) or
    any such knowledge or information as is mentioned in subparagraph (c); or

    (e)

    		 the use of, or the right to use:

    (i)

    motion picture films; or

    (ii)

    films or video for use in connection with television; or

    (iii)

    tapes for use in connection with radio broadcasting; or

    (f)

    total or partial forbearance in respect of the use or supply [of] any property or right
    referred to in this paragraph.

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

    (a)

    such permanent establishment or fixed base or with

    (b)

    business activities referred to under

    (c)

    of paragraph 1 of Article 7. In such case the provisions of Article 7 or Article 14, as the
    case may be, shall apply.

  5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a
    political subdivision, or 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 fixed base in connection with which the liability to pay the
    royalties was incurred, and such royalties are borne byu 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 an enterprise of a Contracting State from the alienation of ships or aircraft
    operated in international traffic [or] of 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 shares or comparable
    interests in a company, the assets of which consist wholly or principally of immovable property
    situated in the other Contracting State, may be taxed in that other State.

  5. Gains from the alienation of shares, other than those mentioned in paragraph 4, in a company which is
    a resident of a Contracting State may be taxed in that State.

  6. Gains from the alienation of any property other that referred to in paragraphs 1, 2, 3, 4 and 5 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 except in 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 within any twelve-month period; in that case, only so much
    of the income as is derived from his activities performed in that other State may be taxed in
    that 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 15
DEPENDENT PERSONAL SERVICES

  1. Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and other similar
    remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable
    only in that 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 90 days within any twelve-month period, 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’ FEE

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

  2. The remuneration which a person to whom paragraph 1 applies derives from the company in respect of the
    discharge of day-to-day functions of a managerial or technical nature may be taxed in accordance with
    the provisions of Article 15.

Article 17
ENTERTAINERS AND SPORTSMEN

  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 a sportsman, 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 a sportsman in his
    capacity as such accrues not to the entertainer or sportsman 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 sportsman 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 supported by funds of one or both of the Contracting States, a local authority or
    public institution thereof.

Article 18
PENSIONS AND ANNUITY

  1. Subject to the provisions of paragraph 2 of Article 19, any pension or other similar remuneration paid
    to a resident of a Contracting State from a source in the other Contracting State in consideration of
    past employment or services in that other Contracting State and any annuity paid to such a resident
    from such a source may be taxed in taxed in that other State.

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

Article 19
GOVERNMENT SERVICE

1. (a)

Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a
local authority thereof to an individual in respect of services rendered to that State or
subdivision or authority shall be taxable only in that State.
(b)

However, such remuneration shall be taxable only in the other Contracting State if the services
are rendered in that other State and the individual is a resident of that State who:
  (i)

is a national of that State; or
(ii)

did not become a resident of that State solely for the purpose of rendering the services.
2. (a)

Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or
a local authority thereof to an individual in respect of services rendered to that State or
subdivision or authority shall be taxable only in that State.
(b)

However, such pension shall be taxable only in the other Contracting State if the individual is a
resident of, and a national of, that other State
(c) The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting State or a political
subdivision or a local authority thereof.

Article 20
TEACHERS AND RESEARCHERS

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

Article 21
STUDENTS AND TRAINEES

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

  2. In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a
    student or business trainee described in paragraph 1 shall, in addition, be entitled during such
    education or training to the same exemptions, reliefs or reductions in respect of taxes available to
    residents of the Contracting State which he is visiting.

Article 22
OTHER INCOME

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

Article 23
METHODS FOR ELIMINATION OF DOUBLE TAXATION

  1. Where a resident of a Contracting State derives income from the other Contracting State, the amount of
    tax on that income payable in that other Contracting State, in accordance with the provisions of this
    Agreement, may be credited against the tax levied in the first- mentioned Contracting State imposed on
    that resident. The amount of credit, however, shall not exceed the amount of the tax in the
    first-mentioned Contracting State on that income computed in accordance with its taxation laws and
    regulations.

  2. Where, in accordance with any provision of this Agreement, income derived by a resident of a
    Contracting State from the other Contracting State is exempt from tax in the other Contracting State,
    the other Contracting State may nevertheless, in calculating the amount of tax on the remaining income
    of such resident, take into account the exempted income.

  3. For the purposes of paragraph 1 of this Article, the income tax paid in the other Contracting State by
    a resident of a Contracting State in respect of business profits earned through a permanent
    establishment situated in the other Contracting State shall be deemed to include any amount of tax
    which would have been payable as tax of the other Contracting State for any year but for an exemption
    from or a reduction of tax granted for that year or any part thereof as a result of the application of
    the provisions of the Law of the other Contracting State designed to extend time limited tax
    incentives to promote foreign investment for development purposes.

  4. For the purposes of paragraph 1 of this Article, the tax paid in the other Contracting State on
    dividends to which paragraph 2 of Article 10 applies, on interest to which paragraph 2 of Article 11
    applies and on royalties to which paragraph 2 of Article 12 applies, shall be deemed respectively to
    be 15 per cent of the gross amount of such dividends, 15 per cent of the gross amount of such interest
    and 15 per cent of the gross amount of such royalties.

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

  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. 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.

  4. Except where the provisions of paragraph 1 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.

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

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

Article 25
MUTUAL AGREEMENT PROCEDURE

  1. Where a person who is a resident of a Contracting State considers that the actions of the competent
    authority 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 that person is a resident. The case must be presented within three years from the first
    notification of the action resulting in taxation not in accordance with the provisions of the
    Agreement.

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

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

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

Article 26
EXCHANGE OF INFORMATION

  1. The competent authorities of the Contracting States shall exchange such information as is necessary
    for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States
    concerning taxes covered by the Agreement insofar as the taxation thereunder is not contrary to the
    Agreement, in particular for the prevention of fraud or evasion of such taxes. The exchange of
    information is not restricted by Article 1. Any information received by a Contracting State shall be
    treated as secret in the same manner as information obtained under the domestic laws of that State.
    However, if the information is originally regarded as secret in the transmitting State it shall be
    disclosed only to persons or authorities (including courts and administrative bodies) involved in the
    assessment or collection of, the enforcement or prosecution in respect of, or the determination of
    appeals in relation to, the taxes 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. The competent authorities shall, through consultation, develop appropriate
    conditions, methods and techniques concerning the matters in respect of which such exchanges of
    information shall be made, including, where appropriate, exchanges of information regarding tax
    avoidance.

  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.

Article 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS

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

Article 28
ASSISTANCE IN COLLECTION

  1. Each of the Contracting States shall endeavour to collect on behalf of the other Contracting State
    such taxes imposed by that Contracting State as will ensure that any exemption or reduced rate of tax
    granted under this Agreement by that other Contracting State shall not be enjoyed by persons not
    entitled to such benefits. The competent authorities of the Contracting States may consult together
    for the purpose of giving effect to this Article.

  2. In no case shall this Article be construed so as to impose upon a Contracting State the obligation to
    carry out administrative measure at variance with the regulations and practices of either Contracting
    State or which would be contrary to the first-mentioned Contracting State’s sovereignty, security, or
    public policy.

Article 29
ENTRY INTO FORCE

  1. Each of the Contracting States shall notify to the other in writing through the diplomatic channel the
    completion of the procedures required by its legislation for the entry into force of this Agreement.
    This Agreement shall enter into force on the date of the later of these notifications.

    (a)

    in Indonesia:
    (i)

    in respect of tax withheld at the source to income derived on or after 1 January in the year
    next following that in which the Agreement enters into force; and
    (ii)

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

    in Vietnam:
    (i)

    in respect of taxes withheld at source, in relation to taxable amount paid on or after 1
    January of the calendar year next following that in which the Agreement enters into force, and
    in subsequent calendar years.
    (ii)

    in respect of other Vietnamese taxes, in relation to income, profits or gains arising in the
    calendar year next following that in which the Agreement enters into force, and in subsequent
    calendar years;

Article 30
TERMINATION

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

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

(a)

in Indonesia:
(i)

in respect of taxes withheld at source to income derived on or after 1 January in the year next
following that in which the notice of termination is given;
(ii)

in respect of other taxes on income, for taxable years beginning on or after 1 January in the year
next following that in which the notice of termination is given;
(b)

in Vietnam:
(i)

in respect of taxes withheld at source, in relation to taxable amount paid on or after 1 January
of the calendar year next following that in which the notice of termination is given, and in any
subsequent calendar years;
(ii)

in respect of other Vietnamese taxes, in relation to income, profit or gains arising in the
calendar year next following that in which the notice of termination is given, and in subsequent
calendar years.

In witness whereof the undersigned, being duly authorized thereto by their respective Governments, have
signed this Agreement

Done in duplicate at Hanoi this twenty-second day of December of the year one thousand nine hundred and
ninety-seven in the Indonesian, Vietnamese and English languages, three texts being equally authentic. In
the case of divergence of interpretation, the English text shall prevail

PROTOCOL

At the signing of this Agreement between the Government of the Republic of Indonesia and the Government of
the Socialist Republic of Vietnam for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (hereafter referred to as “the Agreement”), both sides have agreed
upon the following provisions which form an integral part of the Agreement.

In connection with Article 24, it is understood that

  1. The provisions of paragraphs 2 and 3 of Article 24 shall not apply to the Vietnamese profit remittance
    tax and the Vietnamese taxation in respect of agricultural production activities.

  2. Insofar as Vietnam continues to grant to investors licenses under the Law on Foreign Investment in
    Vietnam, which specify the taxation to which the investor shall be subjected, the imposition of such
    taxation shall not be regarded as breaching the terms of paragraphs 2 and 3 of Article 24.

In witness whereof the undersigned, being duly authorized thereto by their respective Governments, have
signed this Protocol

Done in duplicate at Hanoi this twenty-second day of December of the year one thousand nine hundred and
ninety-seven in the Indonesian, Vietnamese and English languages, three texts being equally authentic. In
case of any divergency of interpretation, the English text shall prevail.

 

FOR THE GOVERNMENT OF
THE REPUBLIC OF INDONESIA
sgd
MOHAMMAD MA’RUF
AMBASSADOR EXTRAORDINARY AND PLENIPOTENTIARY		 FOR THE GOVERNMENT OF
THE SOCIALIST REPUBLIC OF VIETNAM
sgd
NGUYEN SINH HUNG
MINISTER OF FINANCE

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