The Netherlands’ Ministry of Finance has released the synthesised text of the tax treaty with Indonesia providing clarifications regarding the impact of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This synthesised text is based on the reservations and notifications provided by each country to the Depositary.

The MLI is applicable to the 2002 Netherlands-Indonesia tax treaty:

The provisions of the MLI applicable to the agreement do not take effect on the same dates as the original provisions of the agreement. Each of the provisions of the MLI could take effect on different dates, depending on the types of taxes involved (taxes withheld at source or other taxes levied) and on the choices made by the Netherlands and Indonesia in their MLI positions.

The dates of the deposit of instruments of ratification, acceptance, or approval is 29 March 2019 for the Netherlands and 28 April 2020 for Indonesia.

The entry into force of the MLI is 1 July 2019 for the Netherlands and 1 August 2020 for Indonesia.

Entry into effect of the MLI provisions

Under paragraphs 1 and 7 of Article 35 of the MLI, the provisions of the MLI have effect with respect to this Convention by the Netherlands:

• With respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2021 which corresponds to the first day of the next calendar year that begins on or after 30 days after (26 November 2020) the date of receipt by the Secretary-General of the OECD of Indonesia’s notification that it has completed its internal procedures for the entry into effect of the provisions of the MLI with respect to the Convention; and
• With respect to all other taxes levied by the Netherlands, for taxes levied with respect to taxable periods beginning on or after 26 June, 2021 which corresponds to six calendar months after 30 days after the date (26 November 2020) of receipt by the Secretary-General of the OECD of Indonesia’s notification that it has completed its internal procedures for the entry into effect of the provisions of the MLI with respect to the Convention.

Under paragraphs 1, 3, and 7 of Article 35 of the MLI, the provisions of the MLI have effect with respect to this Convention by Indonesia:

• With respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after 1 January 2021 which corresponds to the first day of the next calendar year that begins on or after 30 days after (26 November 2020) the date of receipt by the Secretary-General of the OECD of Indonesia’s notification that it has completed its internal procedures for the entry into effect of the provisions of the MLI with respect to the Convention; and
• With respect to all other taxes levied by Indonesia, for taxes levied with respect to taxable periods beginning on or after 1 January 2022 which corresponds to taxable periods beginning on or after 1 January of the next year beginning on or after the expiration of a period of six calendar months after 30 days after the date (26 November 2020) of receipt by the Secretary-General of the OECD of Indonesia’s notification that it has completed its internal procedures for the entry into effect of the provisions of the MLI with respect to the Convention.