February 2012
Transfer Pricing
Foresight is nothing
Without insight
GR 74 shall affect Tax regulation PER-48/PJ/2010 on MAP in the following manner:
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Transfer pricing contacts
Carlo Llanes Navarro, Partner
carlo.navarro@id.ey.com
Anuar Mukanov, Senior Manager
anuar.mukanov@id.ey.com
Juliawati Juliawati, Manager
juliawati.juliawati@id.ey.com
Sachin Tewari, Manager
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Roisyelian Masrita, Manager
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Agung Wicaksono, Manager
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Dian Mashari, Manager
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Alert!
Special transfer pricing alert
On 29 December 2011 the Government of the Republic of Indonesia issued Government
Regulation No. 74 Year 2011 (GR 74), regarding Procedures for implementation of
taxation rights and fulfillment of tax obligations.
This alert focuses on GR 74s provisions affecting Mutual Agreement Procedure (MAP)
and Advance Pricing Agreements (APA).
A request for MAP may be filed by:
a taxpayer via the Directorate General of Taxation (DGT);
the DGT; or
the tax authority of a relevant Tax Treaty country.
The request for MAP may now be filed simultaneously with the taxpayers application
for any of the following domestic remedies in Indonesia:
An objection of a taxpayer to a Tax Assessment Letter;
A request of a taxpayer for reduction or cancellation of the tax assessment that
is deemed incorrect;
An appeal of a taxpayer to court regarding a Decision of the DGT on the
objection.
In cases where the MAP results in a mutual agreement and the taxpayer does not
seek domestic remedies or the taxpayer objected to the tax assessment or appealed
the objection decision, the DGT will amend the tax assessment or objection decision
in accordance with the MAP results. However, if a taxpayer appeals the objection
decision to court and the latter issues a decision on a taxpayers appeal prior to
finalization of the MAP, then the DGT will terminate the MAP.
In all situations where the MAP does not result in a mutual agreement, the tax
assessments remain in force without any change.
In a similar manner, GR 74 shall affect Tax Regulation PER-69/PJ/2010 on APA as
follows:
The new regulations reinforce that the DGT shall not make any tax assessments
based on the matters agreed in the APA.
In the event the APA process does not result in an agreement between the APA
parties, the respective documents used in the APA process shall be returned to the
taxpayer. Furthermore, the GR 74 requires that such documents shall not be used by
the DGT as a basis for tax assessments, preliminary examination, or criminal
investigations on tax issues.
GR 74 took effect on 1 January 2012 and will apply to fiscal year 2012 and onwards.
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