New Regulation on Preferential Income-Tax Treatment for Foreigners and Indonesians Under International Agreements

Due to the introduction of new cooperation agreements with several new international organizations, the Ministry of Finance (“ Ministry ”) has renewed various provisions on income-tax treatment through the issuance of Regulation No. 202/PMK.010/2017 on the Implementation of Income-Tax Treatment Based on International-Agreement Provisions (“ Regulation 202/2017 ”).Prior to the issuance of Regulation 202/2017, these same matters were already regulated under Ministry Regulation No. 157/PMK.010/2015 on the Implementation of Income-Tax Treatment Based on International-Agreement Provisions, as amended by Ministry Regulation No. 5/PMK.010/2017 (collectively referred to as “ Regulation 157/2015 ”). [1] Income-Tax TreatmentAs a general rule, Regulation 202/2017 entitles foreign nationals and Indonesians (provided that they are employees of international organizations and/or subject to international law) to receive preferential income-tax treatments, as laid out under the various international agreements [2] (“ Agreements ”) listed under the appendix tothis new regulation.Such preferential income-tax treatments will apply until the relevant international agreements expire and are reliant on the approval from Ministry. [3] However, it should be noted that preferential income-tax treatments, as described in the Agreements, can only be implemented under the following conditions: [4]