ARTICLE 19

Students and Trainees

Paragraph 1 of this Article provides special tax rules for individual residents of one of the Contracting States who visit the other Contracting State solely for the purpose of studying at a recognized educational institution or of studying, doing research or receiving training as a recipient of an award from a charitable organization (in the case of the United States, an organization exempt from income tax under Code section 50l(c)(3)) or from either Government or under a technical assistance program entered into by either Government.

The term "solely" as used in paragraph 1 means that the individual must participate in a full-time program of study, research, and/or training. However, he may also undertake a parttime job (as is confirmed by the exemption of certain personal services income provided in paragraph l(b)(iii)) or may engage in occasional outside activities without losing the benefits of this Article.

The host State agrees to exempt such individuals from tax on:

(a) remittances from abroad for their maintenance, study, research, or training, (b) the award received, and (c) not more than $2,000 per year (or an equivalent amount in Indonesian rupiahs) of remuneration for personal services.

The services must be performed in connection with the study, research, or training or be necessary to provide for the individual's maintenance. If the amount earned exceeds $2,000, the exemption applies to the first $2,000. The excess is taxable in accordance with domestic law. The $2,000 exemption does not reduce any personal exemptions and deductions allowable under domestic law.

The period of exemption for individuals who qualify under paragraph 1 may not exceed five years from the individual's date of arrival in the other State.

Paragraph 2 provides that an individual who is a resident of one of the Contracting States and visits the other State as a business or technical apprentice shall be exempt from tax in that other State on the first $7,500 of income (or an equivalent amount in Indonesian rupiahs) from personal services. The period of exemption for individuals who qualify under this paragraph may not exceed, 12 consecutive months. It is intended that the 12-month period begin on the date of arrival. The aggregate amount exempt from tax during that period may not exceed $7,500. Any excess amount earned will be subject to tax under the rules of domestic law, including an allowable personal exemptions and deductions.