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ARTICLE 12

U.S. Income Tax Treaty — Indonesia Income Tax Treaty - 1988 · 2026-10-03 edition · updated 2026-10-04 · United States

Interest

(1) Interest derived from sources within one of the Contracting States by a resident of the other Contracting State may be taxed by both Contracting States.

(2) The rate of tax imposed by one of the Contracting States on interest derived from sources within that Contracting State and beneficially owned by a resident of the other Contracting State shall not exceed 15 percent of the gross amount of such interest.

(3) Notwithstanding paragraphs (1) and (2), interest derived from sources within one of the Contracting States by the other Contracting State or any agency or instrumentality of that other State not subject to tax by that State on its income shall be exempt from tax in the firstmentioned State.

(4) Paragraph (2) shall not apply if the recipient of the interest, being a resident of one of the Contracting States, has a permanent establishment or fixed base in the other Contracting State and the indebtedness giving rise to the interest is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 8 (Business Profits) or Article 15 (Independent Personal Services) shall apply.

(5) Where any amount designated as interest paid to any related person exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the interest as would have been paid to an unrelated person. In such a case the excess payment may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable.

(6) The term "interest" as used in this Convention means income from bonds, debentures, Government securities, notes, or other evidences of indebtedness, whether or not secured by a mortgage or other securities and whether or not carrying a right to participate in profits, and debt-claims of every kind, as well as all other income which, under the taxation law of the Contracting State in which the income has its source, is assimilated to income from money lent.

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▸Contents — U.S. Income Tax Treaty — Indonesia Income Tax Treaty - 1988
U.S. Income Tax Treaty — Indonesia Income Tax Treaty - 1988

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