ARTICLE 29

Assistance in Collection

Under this Article each country agrees to endeavor to assist the other in collecting the additional tax due when a person not entitled to such benefits obtains an exemption or reduced rate of tax under the treaty. For example, if an individual resident of a country with which the United States does not have an income tax treaty has dividends on his U.S. shares paid to an Indonesian bank on his behalf, Indonesia would attempt to collect the additional 15 percentage points of U.S. tax due on such dividends and remit that sum to the United States. Conversely, the United States would make a similar effort on behalf of Indonesia. As explained in paragraph 2, neither State is obligated to undertake administrative measures inconsistent with its regulations and practices or which would be contrary to its public policy. The usefulness of the type of assistance provided for in this Article depends on the way in which the country of source grants reduced rates under the Convention. It is most relevant if the rate reduction is granted simply on the basis of the recipient's address. It becomes less important if an official certification of residence of the beneficial owner is required, or if the initial tax is imposed at the statutory rate and the excess refunded when the beneficial owner documents his residence.