SAOPRA contends that by virtue of Article 29 of the Indonesia / Seychelles DTA, the DTA is legally binding and cannot be ended until 2010 at the earliest. SAOPRA further states that, notwithstanding inferences to the contrary by the Indonesian Tax Office, Seychelles companies can be resident (and have permanent establishment) in Indonesia (such as if managed by Indonesian residents) and so step outside the terms of the DTA and become fully taxable in Indonesia.

On the other hand, if persons are using Seychelles tax resident companies to hold shares in Indonesian companies and, apart from that, the Seychelles companies conduct no activities in Indonesia (and have a permanent establishment in Seychelles), then the Seychelles companies can lawfully access and rely on the DTA benefits (including reduced Indonesian withholding tax on repatriated dividends and avoidance of Indonesia capital gains tax on sale of the shares).

SAOPRA further points out that the Indonesia Government did not terminate the Mauritius DTA in terms of "early" cancellation. Indonesia chose to cancel its DTA with Mauritius when the DTA came to its natural end in December 2004.

The Seychelles / Indonesia DTA sets a cap of 10% Indonesian withholding tax on repatriated dividends, interest and royalties (instead of usual rate of 20%). More particularly Article 13(4) provides that no Indonesian capital gains tax applies on disposal of shares in Indonesian companies held by the Seychelles company (ie. gains are taxable in Seychelles, but no tax applies as there is no CGT in Seychelles).

The Seychelles / Indo DTA also offers a fiscal advantage over the Singapore / Indo DTA. The principal difference lies in the treatment of the proceeds from the sale of shares in a private Indonesian company. Under the Seychelles DTA, the gain is exempt from tax; there is no exemption under the Singapore DTA. Therefore, if a Singapore company sells the shares of a private Indonesian company, a 5% tax is levied on the gross sales proceeds. This tax is particularly painful if the shares are being sold at a loss since the tax is levied on gross proceeds, not the gain.