Indonesia and Singapore have updated their 29-year old bilateral tax treaty, lowering the tax rate on royalties and net income of companies operating in both countries.
The agreement was among several other deals signed by President Joko "Jokowi" Widodo and Singapore President Halimah Yacob when they met at the Bogor Presidential Palace on Tuesday.
"I am very satisfied with the progress of our cooperation," Jokowi said. "The first one was that we completed the negotiation on the double tax avoidance agreement."
Indonesia and Singapore had been negotiating revisions to the double tax avoidance agreement for almost two years.
Under the agreement, Indonesian citizens are exempted from paying Singapore tax, and vice versa.
President Yacob said the updated DTA sends a strong signal that the two countries are committed to strengthening economic cooperation.
She said she hoped the DTA and bilateral investment agreements signed in 2018 would be ratified and enter into force soon.
Aside from the tax treaty, the two countries also agreed that Indonesia's Directorate General of Customs and Excise and the Singapore Police Coast Guard would work together to enforce customs rules.
Singapore also agreed to provide training programs for Indonesian regional heads and work closely with them to improve investment.
"It was also agreed to extend the repurchase agreement first made in November 2019 between Bank Indonesia and the Monetary Authority of Singapore. We will also strengthen cooperation in training for industry 4.0," Jokowi said.
President Yacob said she was happy to be in Indonesia – her first official visit to Southeast Asia's biggest economy. The bilateral relations between Indonesia and Singapore have been going on for 52 years.