May 23, 2019 2019-0982 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. ——————————————— CONTACTS 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 PDF version of this Tax Alert ![](/_IncludeFiles/TinyMCE_4.0.5/plugins/knotianewsattachment/icons/Icon_PDF.gif)
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