Tax Clinic
Tax Treaty Provisions for Coldplay Concert Income in Indonesia

Wednesday, 22 November 2023

Tax Treaty Provisions for Coldplay Concert Income in Indonesia

Music lovers in Indonesia have just had the arrival of a popular band from England, Coldplay. Chris Martin and the band came to Indonesia as part of the Music of The Spheres Tour series.

Apart from Indonesia, Coldplay has previously visited some other countries, including countries in Europe, America, and Asia. Meanwhile, in Indonesia, Coldplay's concert at Gelora Bung Karno (GBK) drew an audience of approximately 80,000 spectators.

For Indonesia, Coldplay's arrival has had various impacts, one of which is the economic impact. On the economic growth side, concert activities by popular artists will increase public consumption. Apart from having to spend money to buy tickets, sales of merchandise and accommodation services have also increased.

Read: Minimizing Tax Treaty Abuse, Certificate of Domicile Review Procedure is Issued

Bound by Tax Treaty

On the tax side, the concert will increase state revenue. This is because the income received by Coldplay for performing in Indonesia is the object of income tax, which is regulated in the Double Taxation Avoidance (DTA) Agreement between the Indonesian and British governments.

Based on the DTA or what is commonly called the tax treaty, Indonesia has the right to collect income tax on the income received by artists who perform in the country.

The provision, in detail, is regulated in Article 17 paragraph (1) of the Indonesia - UK Tax Treaty:

Notwithstanding the provisions of Articles 14 and 15 of this Agreement, income derived by a resident of a Contracting State as an entertainer, such as a theater, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

The provision also does not recognize the time test requirement. Thus, it remains binding even though Coldplay is only in Indonesia for 1 day.

Scope of Tax Treaty

For information, by taking advantage of the tax treaty, taxpayers who are not Indonesian tax subjects have the opportunity to enjoy the tax rates specified in the DTA agreement. So, it is not based on tax provisions that generally apply in Indonesia or their country of residence.

To ensure that a person or corporation has the right to enjoy DTA facilities, the Directorate General of Taxes (DGT) will check and review the attached domicile certificate.

Two types of review will be carried out by DGT, namely formal review and material review. Referring to the Circular Letter of the Director General of Taxes number SE-35/PJ/2021, the formal review was carried out on the formal and material aspects of the domicile certificate.

Meanwhile, material review is carried out after a formal review is carried out. In material research, tax officials will review the material aspects of the domicile certificate, to ensure that there is no misuse of the DTA and that it meets the provisions as a beneficial owner. (ASP/KEN)


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