Islamic and Sharia Finance

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Sabtu, 11 Februari 2017

Two Ways to avoid International Multiple Tax


There are two ways to avoid international multiple tax, i.e. how to unilaterally (unilateral) and bilateral or multilateral way.

Unilateral Ways

Done by inserting provisions to avoid multiple tax into legislation of a country with a clear procedure. To be included in the legislation of a country is the principles it was customary international, such as the tax exemption provisions of the diplomatic representatives, representatives of international organizations. Tax exemptions usually required the existence of a principle of reciprocity or behind which means that the country concerned will give the new exemption when instead of other countries also gives exemption on the basis of the same terms.



Income tax act Indonesia adhere to the way multiple tax evasion with a method called with the method of tax credits. Section 24 of the ACT the PPh No. 36 Year 2008 States that:

Subsection (1): tax paid or payable abroad on the income received from abroad or obtained tax payers in the country may be credited against the tax payable on the basis of this legislation in the same tax year.

Subsection (2): the magnitude of the tax credit referred to in subsection (1) is in the amount of income tax paid or payable abroad but shall not exceed the tax payable calculation based on this law.

Paragraph(3): in calculating the limits the amount of tax to be credited, source of income is determined as follows:

  • Income from shares and other securities as well as gains from the transfer of shares and other securities is the country where the Agency which issued the stock or securities is established or domiciled;
  • The income in the form of interest, royalties, and rents in connection with the use of the property of motion is the country where the party who paid or charged interest, royalties, or the rent or are domiciled;
  • Income in the form of rent in respect of the use of motion was a State treasure treasures are located;
  • Income form reward with respect to services, employment, and activity is the country where the party who pays the reward burdened or domiciled or located;
       e. a fixed form of business income is the country where the permanent establishment doing business or activities;
  • Revenue from the transfer of part or all of mining rights or participate in financing or capital in mining companies is the country where the site is mine; 
  • Advantages due to the transfer of property is still the country that treasures remain; and
  • Gains due to a transfer of property that is a part of a permanent establishment is the country where the business form remained.

Paragraph (4): determination of source of income other than earnings referred to in subsection (3), using the same principles with the principles referred to in the text.

Subsection (5): If the tax on the income from abroad which later turned out to be deductible or creditable reversed, then the tax payable under this Act must be added to the amount of such reduction or refund in the year it was made.

Subsection (6): provisions on implementation of crediting of the tax on the income from abroad is regulated by or under regulations of the Minister of finance.

Multilateral Ways

Done through a peundingan between countries concerned to prevent the occurrence of double taxation. Agreement bilateral secar conducted by the two countries, while multilateral done by more than two countries. This agreement often referred to with the term tax treaty or P3B (agreement for avoidance of double taxation and the prevention of tax evasion).

Each country has its respective taxes principle in accordance with the sovereignty of his own country. So that bilateral way tax evasion is the most widely performed by a country. While multiple tax evasion agreement (P3B) which is carried out by multilateral way rarely occurs because due to the difficulty of conducting intensive talks with several countries at once.


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