Indonesia and Hong Kong Sign DTA

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Mar. 24 – Officials from Indonesia and Hong Kong signed the Double Taxation Preventatives Agreement in Jakarta on Tuesday, which both parties hope will spur regional trade as demand from the United States and Europe continues to slow.

Signed by Hong Kong’s Financial Secretary John Tsang and Indonesia’s Finance Minister Sri Mulyani, the deal halves taxes on dividend and interest income from 20 percent to 10 percent; shareholders owning at least 25 percent of a company can further enjoy a reduced rate of 5 percent. Furthermore, royalty tax, which is now at 20 percent, will be cut down to 5 percent, and tax on dividends from investments above 25 percent of total business value will be reduced to 5 percent.

“This would help in doing business in Hong Kong and Indonesia. It provides certainty for businesses. They will pay less tax than they are now. So we expect this would facilitate and enhance business opportunities,” Mr. Tsang said in an interview with The Jakarta Post.

“We can do more things together, particularly as our traditional markets – the U.S. and EU countries – are importing less. So I think we need to expand our own regional market to compensate for exports we have lost in traditional markets,” he added.