ARTICLE 17

Artistes and Athletes

This Article provides exceptions to the rules of Articles 15 (Independent Personal Services) and 16 (Dependent Personal Services) for remuneration derived by public entertainers and athletes. The remuneration of producers, directors, technicians, and others who are not entertainers or athletes is covered by Articles 15 and 16.

When an individual who is a resident of one of the Contracting States performs as a public entertainer or athlete in the other Contracting State, the latter State may tax the remuneration for such services if the gross amount, including reimbursed expenses, exceeds $2,000 U.S. dollars (or the equivalent in Indonesian rupiahs) in any consecutive 12 months. This is a compromise between Indonesia's preferred position, which is to tax such income at source with no threshold (as in the OECD and U.N. models), and the U.S. Model, which allows a higher threshold. (The $2,000 figure assumes that, in the typical case, a U.S. entertainer or athlete performing in Indonesia will be doing so as part of a broader tour which includes visits to other countries in the area, in which case the expenses associated with the visit to Indonesia will be the incremental amount, not the full coats of the travel from and to the United States.) Paragraph 3 provides further relief in the case of visits supported or sponsored by the Contracting State of which the individual is a resident.

Paragraph 2 provides that where income for the performance of personal services by an entertainer or athlete does not accrue to that individual, but is diverted to another person, the income may be taxed in the State where the services are performed, notwithstanding the provisions of Articles 8 (Business Profits) and 15 (Independent Personal Services), i.e., notwithstanding that the person receiving the income does not have a permanent establishment or fixed base in that State. This is an anti-abuse rule, intended to have the same effect as the corresponding provision in the U.S. Model.

Paragraph 3 provides that the provisions of paragraphs 1 and 2 do not apply to income from profits derived from services performed in a Contracting State during a visit which is substantial1y supported or sponsored by the other Contracting State. The competent authority of the sending State must certify that the visit qualifies under this provision. This rule, which is similar to a provision in the U.S. - Philippines income tax treaty, is intended to remove from the scope of this Article cultural exchanges and performances which the governments encourage by providing substantial sponsorship or support. In such cases, the taxation of the remuneration will be governed by Article 15 (Independent Personal Services) or 16 (Dependent Personal Services).