New Regulation on Guidelines for Mutual Agreement Procedure (MAP)

SE-18/PJ/2025

The Directorate General of Taxes (“DGT”) has issued Circular Letter Number SE-18/PJ/2025, which provides updated guidelines for the implementation of the Mutual Agreement Procedure (“MAP”). This circular letter replaces the previous guidelines under SE-49/PJ/2021 and is issued to align the MAP administrative framework with Minister of Finance Regulation No. 172 of 2023 (“PMK-172”). The regulation aims to enhance legal certainty, procedural clarity, and alignment with international tax treaty standards.

Under SE-18/PJ/2025, MAP requests may be initiated by several parties. Domestic Taxpayers (Wajib Pajak Dalam Negeri or WPDN) may submit MAP requests in cases involving double taxation arising from transfer pricing adjustments, profit attribution, permanent establishment issues, or other tax adjustments, as well as withholding or collection that is inconsistent with applicable tax treaties. MAP requests may also be submitted in relation to disputes over domestic taxpayer status determined by treaty partners or discriminatory tax treatment. In addition, Indonesian citizens (WNI) may initiate MAP requests if they are subject to discriminatory treatment by a treaty partner that violates the non-discrimination principle under the relevant tax treaty.

The circular letter further provides that the DGT may initiate a MAP on its own initiative, either to follow up on a taxpayer’s request or in connection with a bilateral or multilateral Advance Pricing Agreement (APA) process. In addition, the tax authorities of treaty partners may submit MAP requests directly to the DGT through the Directorate of International Taxation. This framework reflects Indonesia’s commitment to international cooperation and effective dispute resolution under tax treaties.

SE-18/PJ/2025 also sets out the procedures for initial assessment and negotiation. The Assessment Team is required to examine the completeness of requirements and the material suitability of the request within one month of receipt. If the request meets the applicable criteria, the team will issue a notice confirming that the MAP process may proceed and will forward the MAP request to the treaty partner within one month. During the negotiation stage, the team will conduct correspondence, substantive analysis, and meetings with the treaty partner’s tax authority, with the MAP negotiation process potentially running for up to 24 months. The outcome of the MAP, whether resulting in agreement or non-agreement, is documented in a mutual agreement record, and where an agreement is reached, the Director of International Taxation will issue a notification letter within 14 calendar days from the date of the mutual agreement.