Qatar wants Indonesia tax treaty legalised

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JAKARTA, July 16 (Xinhua): Qatar has asked Indonesia to ratify a tax treaty so it can continue a one billion US dollars infrastructure development fund it committed to Indonesia last year, local press said today.
The Qatar Investment Authority committed on the infrastructure development fund during President Susilo Bambang Yudhoyono's visit to the Middle East in May last year. Qatar would provide 85 per cent of the fund and Indonesia would provide the rest and a memorandum of understanding on the fund was signed in May this year, reported English daily The Jakarta Post.
Tax treaties commonly provide more lenient taxation between participating countries. Lower income taxes can be provided, along with a provision to avoid taxation for a second time in the corresponding country-commonly known as double taxation.
The treaty against double taxation in both countries may be needed because Qatar and Indonesia could manage the infrastructure fund through a joint company, the Finance Ministry's Director General for the Treasury Herry Purnomo was quoted as saying.
"Qatar has actually offered the setting up of a company (for the fund) with a wide business scope, although we want it to focus on financing infrastructure development," Herry said.
"There have been options to cooperate with local firms, invest directly, or to go through the government's investment agency ... but there are still some taxation issues regarding this."
Indonesia needs 1,000 trillion rupiah (111 billion US dollars) in investment this year to achieve its 6.3 per cent growth target, and another 150 billion dollars in infrastructure development fund over the next five years to sustain more investment ahead, the newspaper said.