Operational Guideline on Advance Pricing Agreements (APA)

On 17 September 2020, the Directorate General of Taxes (“DGT”) issued Regulation No. PER-17/PJ/2020 (“PER-17”) which acts as the operational guideline of Ministry of Finance Regulation Number 22/PMK.03/2020 (“PMK-22”) issued on 18 March 2020 regarding Advance Pricing Agreements (APA).
The salient points of PER-17 are summarized as follows:

• PER-17 further discusses in detail the procedure for the termination of an ongoing APA process;
• PER-17 elaborates the evaluation process that the DGT will perform after the APA is concluded, i.e., how the DGT would monitor the compliance of the taxpayers post-APA and the consequences of not complying;
• Last but not least, PER-17 makes an exception for Taxpayers whose profitability is adversely impacted by the Covid-19 pandemic to still be able to apply for an APA – as long as the drop in profitability is proven to be caused by the Covid-19 pandemic and not by the changes of the transfer prices proposed in the APA application.

With the introduction of PER-17, DGT Regulation Number PER-69/PJ/2010 is nullified.