Indonesia: Updated regulations on advance pricing agreements

Indonesia: Updated regulations on APAs

The tax administration of Indonesia has updated the advance pricing agreement (APA) regulations.

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The new regulations, effective 18 March 2020, include amendments concerning:

  • Simplification of the APA application process: The taxpayer is now permitted to file the application for the APA directly (previously extensive information had to be provided during the pre-filing process).
  • Extension of validity of APA: Bilateral and unilateral APAs will both be viable for a period of five years (previously three years for unilateral APAs and four years for bilateral APAs). The taxpayer may now apply for an APA rollback, which was not previously possible. The rollback can apply to years prior to the years covered by the APA, provided that facts and conditions remain the same and certain other conditions are met.
  • Annual compliance requirements: Annual compliance reports are no longer necessary. However, the tax administration retains the authority to evaluate the APA and to discuss the implementation of the APA, obtain further information, and review the business activities of the taxpayer.
  • Extension process: APAs may now be extended for one consecutive period. Extension requests under the previous regulations were treated as a new request. With the new regulations, an extension may be granted if the facts and circumstances remain the same and other conditions are met.

The new regulations also reflect additional administrative requirements and deadlines as well as guidance on the application of transfer pricing methodologies.

Read an April 2020 report [PDF 354 KB] prepared by the KPMG member firm in Indonesia

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