The Implementing Procedure for the Advance Pricing Agreement
- April 13, 2020
- Posted by: Administrator
- Category: Tax News
On 18 March 202, the Minister of Finance (MoF) issued a Regulation No. 22/PMK.03/2020 (“PMK-22”) concerning the Implementing Procedure for the Advance Pricing Agreement (APA).
The APA represents a written agreement between:
- The DGT and Taxpayer; or
- The DGT with the tax authority of the Tax Treaty Country Partners that involves the Taxpayer,
In general, APA can be submitted by the Taxpayer with the criteria below:
- Have submitted the Corporate Income Tax Return (“CITR”) 3 (Three) fiscal years before the submission of APA application;
- Have been required and has submitted the Transfer Pricing Documents in the form of Master File and Local File in accordance to the regulation for 3 (Three) fiscal years before the submission of APA application;
- Not in a criminal investigation as being conducted or not undergoing a criminal offense in the field of taxation;
- Related Parties and its transaction have been reported to the CITR;
- The proposed transfer pricing determination stated in the APA’s application have been made in the arm’s-length principles. The proposed APA shall not make the taxpayer’s operating profit becoming smaller than the operating profit that has been reported in its CITR.
Please refer to our separate publication of Tax Alert for this APA subject.