Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

May 22, 2019
2019-5660

Indonesia issues new guidance on Mutual Agreement Procedure

Executive summary

Indonesia’s Ministry of Finance (MOF) has released Regulation Number
49/PMK.03/2019 (PMK-49), providing guidelines for the implementation of the Mutual Agreement Procedure (MAP). PMK-49 is to implement in Indonesia the minimum standards contained in Action 14 of the OECD’s1 BEPS2 Project. PMK-49 became effective as of 26 April 2019 and provides specific procedures and timelines for the MAP application.

PMK-49 revokes the MOF Regulation Number 240/PMK.03/2014 (PMK-240). While PMK-49 is generally consistent with PMK-240, PMK-49 includes changes as discussed below.

This Alert summarizes key aspects of PMK-49.

Detailed discussion

Specific timelines for the MAP

PMK 49 provides that a taxpayer, the Directorate General of Taxation (DGT) and a treaty partner’s competent authority (CA) must follow the specific timelines during the MAP. PMK-49 states that the DGT will conduct negotiations with the CA within 24 months of the initial date of the MAP request.

Disagreement conditions

The following conditions may result in a MAP disagreement:

  • Negotiation resulting in disagreement
  • Agreement not being reached prior to the DGT’s 24-month time limit for the negotiation
  • A tax court decision made before the agreement is reached in negotiations
  • The statute of limitations expiring and negotiations not reaching the agreement
  • Taxpayer enrolling in a tax amnesty program for a period referred to in the MAP request

Information gathering during the MAP

Under PMK-49, an information request by a foreign CA should be made directly to the DGT, however PMK-49 leaves open the ability for the DGT to gather information from all relevant parties.

PMK-49 grants the DGT the right to cancel a MAP process when the information gathering processes are not followed.

Revocation of MAP requests

PMK-49 also includes procedure for a taxpayer to request a revocation of the MAP request. The DGT may reject a revocation request in certain circumstances.

Transition period

All MAP submissions that are already in progress will be followed up by the DGT under PMK-49. It is not entirely clear, however, how the DGT will apply the time limits contained in PMK 49 to these on-going MAP cases.

Endnotes

1. Organisation for Economic Co-operation and Development.

2. Base Erosion and Profit Shifting.

For additional information with respect to this Alert, please contact the following:

EY Indonesia, Jakarta
  • Santoso Goentoro | santoso.goentoro@id.ey.com
  • Jonathon McCarthy | jonathon.mccarthy@id.ey.com
  • Peter Mitchell | peter.mitchell@id.ey.com
  • Peter Ng | peter.ng@id.ey.com
  • Micky M Soeradiredja | micky.mintarsyah@id.ey.com
Ernst & Young LLP (United States), Indonesia Tax Desk, New York
  • Ihsan Muttaqien | ihsan.muttaqien1@ey.com
Ernst & Young LLP (United States), Asia Pacific Business Group, New York
  • Chris Finnerty | chris.finnerty1@ey.com
  • Kaz Parsch | kazuyo.parsch@ey.com
  • Bee-Khun Yap | bee-khun.yap@ey.com

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more