Treaty detail
United States - Indonesia tax treaty
A practical treaty page built around the official treaty text, key withholding categories, permanent-establishment rules, and article-level summaries.
Signed
1988-07-11
Effective
1990-02-01
Articles seeded
6
Withholding snapshot
Dividends
Individual rate: 15% · Corporate rate: 10%
The lower 10 percent corporate rate generally depends on a direct-ownership threshold under the treaty. Indonesian domestic dividend-withholding rules apply where treaty conditions are not satisfied.
Interest
Rate: 10%
The treaty applies a 10 percent ceiling on most interest. Government and central-bank interest may obtain better treatment under the article.
Royalties
Rate: 10%
Royalties generally face a 10 percent ceiling under the treaty across the core categories.
Permanent establishment
Construction threshold: more than 120 days
Dependent-agent analysis remains important under the treaty wording, with specified habitual-conclusion-of-contracts rules.
Other treaty flags
Pension treatment is article-specific under the treaty wording.
Seeded article summaries
Article 4
Residence
Defines treaty residence and provides tie-breaker tests for dual residents.
Article 4 is the entry point for treaty entitlement and matters for both individuals and entities whose residence determination depends on the treaty rather than purely domestic law.
Article 5
Permanent Establishment
Sets the business-presence threshold including a service-PE rule.
The Indonesia treaty includes a service-PE provision that can create a permanent establishment based on the furnishing of services beyond a defined number of days. Practical analysis requires careful tracking of service-presence days.
Article 7
Business Profits
Generally reserves business profits to the residence state in the absence of a permanent establishment.
Article 7 is the operating rule for cross-border services. The interplay with the service-PE rule in Article 5 makes day-counting and contract structure important.
Article 10
Dividends
Caps source-country withholding on dividends at treaty ceilings that vary with shareholding.
Article 10 produces the 15 percent portfolio rate and the lower 10 percent direct-investment rate shown in IRS Treaty Table 1.
Article 11
Interest
Limits source-country withholding on qualifying interest to a 10 percent ceiling.
Article 11 reflects the treaty's 10 percent ceiling on most interest, subject to specified carve-outs for government and central-bank interest.
Article 12
Royalties
Limits source-country withholding on royalties to a 10 percent ceiling.
Article 12 caps royalties at 10 percent. Article-by-article review remains important to determine category classification in specific fact patterns.
Official text
Other treaties involving these jurisdictions
Computed from the cross-reference graph. Links open the related entity on this site.
This entry cites
- TreatyUS–GB treaty
- TreatyUS–CA treaty
- TreatyUS–DE treaty
- TreatyUS–FR treaty
- TreatyUS–JP treaty
- TreatyUS–NL treaty
- TreatyUS–AU treaty
- TreatyUS–KR treaty
Primary sources
- IRS Indonesia treaty documents pageVerified 2026-05-20
- Official U.S.-Indonesia treaty PDFVerified 2026-05-20
- IRS Tax Treaty Table 1Verified 2026-05-20
- Indonesian Directorate General of Taxes - tax treaty pageVerified 2026-05-20
Important disclaimer
This library is for general tax education only. Always verify filing obligations, due dates, and tax consequences against the cited primary source or with a qualified tax professional.