Indonesia and Tajikistan Ratify Double Taxation Avoidance Treaty
- On January 1, 2020, the double taxation avoidance agreement between Indonesia and Tajikistan came into force. It was ratified by the two countries late November last year.
- Despite having had diplomatic relations for more than 25 years, bilateral trade remains low.
- Going forward, Indonesia and Tajikistan will strengthen trade relations through 11 areas of cooperation.
On November 29, 2019, Indonesia ratified an agreement with Tajikistan on the avoidance of double taxation (DTA) and the prevention of fiscal evasion with respect to taxes on income. While an agreement on a DTA framework was agreed on back in 2003, it was signed only in 2019. The treaty has been in effect since January 1, 2020.The agreement is a major step in improving trade between the two nations; despite having diplomatic ties for more than 25 years, total trade between the two amounts to less than US$5 million annually. Indonesia’s main imports from Tajikistan are cotton and zinc while it exports textiles, soap, electronics, shoes, furniture, and plastics to the country.
During an official visit to Tajikistan with members of parliament in September 2019, Indonesia’s then Deputy Speaker of the People’s Representative Council, Fahri Hamza, expressed the Indonesian government’s willingness to strengthen its trade relations with Tajikistan through 11 areas of cooperation. These include education, commodities, tourism, visa-free access, energy, and security.
Additionally, Hamza asserted that it was also time for Indonesia to establish an embassy in Tajikistan as the current consular services are located in neighboring Kazakhstan.
Through this agreement, Indonesia appears to be signaling that it understands the growing importance of establishing trade relations with Central Asia. The region will play a vital role in the coming years in integrating global supply chains through China’s Belt and Road initiative.