Question 1

Article 5 Paragraph (4) Tax Treaty Indonesia-Japan:Notwithstanding the provisions of the preceding paragraphs, the term permanent establishment shall be deemed not to include: (a)the use facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b)the maintenance of a stock of goods or merchandise to the enterprise solely for the purpose of storage or display;

(c)the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d)the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;

(e)the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character for the enterprise;

(f)the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

Article 7 Paragraph (1) (3) Tax Treaty Indonesia-Japan:1. The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in that other Contracting State but only so much of them as is attributable, to that permanent establishment.1. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.1. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere.

Answer:Refer to Article 5 Paragrah (4) Tax Treaty Indonesia-Japan, Ofiice A and Office B shall not be deemed as a Permanent Establishment of X.Co., because it is dedicated to maintain and display of cars it produced and for research and development.

Tax obligation:Refer to Article 7 Paragraph (1) & (3), the profits of X, Co. shall be taxable only in Japan because the enterprise doesnt carry on business in Indonesia through a permanent establishment situated therein.

Question 2

Article 10 Paragraph (1) & (2) Tax Treaty Indonesia-Japan:1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.1. However, such dividends may also be taxed in that Contracting State of which the company paying the dividends is a resident, and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed : (a)10 per cent of the gross amount of the dividends if the beneficial owner is a company which owns at least 25 per cent of the voting shares of the company paying the dividends during the period of twelve months immediately before the end of the accounting period for which the distribution of profits takes place;

(b)15 per cent of the gross amount of the dividends in all other cases.

The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

Answer: Mr. Fukuji shares on February 2008 is 110.000/250.000 or 44%. Mr. Fukuji shares on March 2009 is 50% x 44% (110.000 shares) or 22% (55.000 shares). There is no change of Mr. Fukuji shares since March 2009. Mr. Fukuji shares in 2010 is 22% (55.000 shares). Mr. Fukuji shares in 2011 is 22% (55.000 shares).

a. 2010 tax obligation (there is no Certificate of Domicile):Refer to Artice 26 Paragraph (1) Indonesia Income Tax Law (because Mr. Fukuji couldnt provide his Certificate of Domiclie to Indonesian Tax Authority):Tax obligation of Mr. Fukuji = 20% x (55.000 x 10,00) = Rp110.000,00.PT Kaya Raya should withhold this tax obligation from Mr. Fukuji (See Art. 26 Indonesia Income Tax Act).

b. 2011 tax obligation (there is Certificate of Domicile):Refer to Article 10 Paragraph (1) & (2) Tax Treaty Indonesia-Japan (Mr. Fukuji could provide his Certificate of Domiclie to Indonesian Tax Authority):Tax obligation of Mr. Fukuji = *15% x (55.000 x 5,00) = Rp41.250,00.*Mr. Fukuji shares is 22% (less than 25%)PT Kaya Raya should withhold this tax obligation from Mr. Fukuji (See Art. 26 Indonesia Income Tax Act).

Question 3

Article 14 Paragraph (1) & (2) Tax Treaty Indonesia-Japan:1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities or he is present in that other Contracting State for a period or periods exceeding in the aggregate 183 days in the calendar year concerned. If he has such a fixed base or remains in that other Contracting State for the aforesaid period or periods, the income may be taxed in that other Contracting State but only so much of it as is attributable to that fixed base or is derived in that other Contracting State during the aforesaid period or periods.1. The term professional services includes, especially, independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineer, architects, dentists and accountants.

Answer:Visiting days of Mr. Sakurata in Indonesia:12 March 30 May 2010 (first visit) & 16 August 18 October 2010 (second visit) March 2010 (12 March 31 March) = 20 days. April 2010 (1 April 30 April) = 30 days. May 2010 (1 May - 30 May) = 30 days. August 2010 (16 August 31 August)= 16 days. September 2010 (1 September 30 September)= 30 days. October 2010 (1 October 18 October)= 18 days.Total=144 daysThe right to tax the income received by Mr. Sakurata:Refer to Artice 14 Paragraph (1) & (2) Tax Treaty Indonesia-Japan, the right to tax the income received by Mr. Sakurata is Japan, because Mr. Sakurata is present in Indonesia only 144 days, not exceeding 183 days as of Article 14 Par. (1) Tax Treaty Indonesia-Japan.There is no tax obligation in Indonesia.

Question 4

Article 14 Paragraph (3) Tax Treaty Indonesia-Singapore:Nothwithstanding the provisions of paragraph 1 and 2, remuneration derived in respect of an employment exercise aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State.

Article 11 Paragraph (5) & (6) Tax Treaty Indonesia-Singapore:5.Notwithstanding the provisions of paragraph 2 and 3, the Government of a Contracting State shall be exempt from tax in the other Contracting State in respect of interest derived from that other State.6.For the purposes of paragraph 5, the term Government:(a)in the case of Singapore means the Government of Singapore and shall include:(i)the Monetary Authority of Singapore and the Board of Comissioners of Currency;(ii)the Government of Singapore Investment Corporation Pte Ltd;(iii)(aa) Port of Singapore Authority;(bb) Public Utilities Board;(cc) Telecomunication Authority of Singapore; and(iv)any statutory body, public body or institution as may be agreed between the competent authorities of the Contracting States;...

Answer:(a) The taxing right prevails of Paijos remuneration:Refer Article 14 Paragraph (3) Tax Treaty Indonesia-Singapore, the taxing right prevails of Paijos remuneration is Singapore because remuneration derived in respect of an employment exercise aboard a ship aircraft operated in international traffic by an Singapore enterprise.

(b) The taxing right prevails of interest:Refer to Article 11 Paragraph (5) & (6) Tax Treaty Indonesia-Singapore, the taxing right prevails of interest is Singapore because interest paid by Government of Indonesia and provider of the loan is Port of Singapore Authority, one of terms included Government of Singapore.

Question 5

Article 5 Paragraph (2) letter h Tax Treaty Indonesia-Singapore:The term permanent establishment shall include especially a building site of construction, installation or assembly project which exists for more than 183 days;

Article 5 Paragraph (4) Tax Treaty Indonesia-Singapore:An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on supervisory activities in that other State for more than 6 months in connection with a construction. Installation or assembly project which is being undertaken in that other State.

Article 5 Paragraph (5) letter a Tax Treaty Indonesia-Singapore:A person acting in one of the Contracting State for or on behalf of an enterprise of the other Contracting State other than an agent of an independent status to whom paragraph 6 of this Article applies-shall be deemed to be a permanent establishment in the first-mentioned State, if he has, and habitually execises, in the first-mentioned State a general authority to conclude contracts of or on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise.

Answers:(a) The existing of installation or assembly project is 6 March 20 September 2010:March 26 daysApril 30 daysMay 31 daysJune 30 daysJuly 31 daysAugust 31 daysSeptember 20 daysTotal199 daysRefer to Article 5 Paragraph (2) letter h Tax Treaty Indonesia-Singapore, the installation or assembly project shall be deemed as a Permanent Establishment because the existing of installation or assembly project for more than 183 days.

(b) Refer to Article 5 Paragraph (4) Tax Treaty Indonesia-Singapore, supervisory activities in connection with a construction, installation or assembly project shall not be deemed as a Permanent Establishment because that activities not more than 6 months is being undertaken in that other State.

(c) Refer to Article 5 Paragraph (5) letter a Tax Treaty Indonesia-Singapore, the activities shall not be deemed as a Permanent Establishment because the activities are limited to the purchase of goods or merchandise for the enterprise.