Minister of Finance Sri Mulyani Indrawati has issued new rules concerning the submission of international treaty dispute resolution through mutual agreement procedure (MAP) which is stated in Minister of Finance Regulation (PMK) Number PMK.49 / PMK.03 / 2019 concerning Procedures for Joint Approval Procedures.
The background of this rule was prepared because along with the increasingly intensive tax audits related to transfer pricing and other international taxation issues, requests for international tax dispute settlement through Mutual Agreement Procedure (MAP) are increasing every year.
For these conditions, the Director of Counseling, Services, and Public Relations of the Directorate General of Taxes, Hestu Yoga Saksama expects this rule to provide more certainty in the procedure and time period for filing tax dispute settlement for taxpayers (WP).
Taxpayers who face tax disputes such as tax treatment that is not in accordance with the P3B can submit a request for the implementation of the MAP to the Director General of Tax through the Head of the Tax Office where registered taxpayers or the Director of International Taxation in the event that the request for implementation is submitted by Indonesian Citizens or P3B Partner Authorities.
MAP Filing Requirements
1. Request for the implementation of MAP submitted by the Applicant, must meet the following requirements:
a. submitted in writing in the Indonesian language;
b. stated the discrepancy in the application of P3B provisions according to the Petitioner;
c. submitted within the time limit as stipulated in the P3B or no later than 3 (three) years if not stipulated in the P3B, starting from: 1) the date of the tax assessment letter; 2) date of proof of payment, withholding or collection of income tax; or 3) the time of tax treatment that is not in accordance with the provisions of the Tax Treaty.
d. signed by the applicant or representative as referred to in Article 32 paragraph (1) of the KUP Law; and
e. attached with: 1) certificate of domicile or other document containing the identity of the taxpayer in the P3B Partner’s domestic tax related to the request for the implementation of the MAP as referred to in Article 2 paragraph (2) letter a and letter b;
2. List of information and / or evidence or information possessed by the Applicant showing that the tax treatment by the Tax Treaty Partner Tax Authorities is not in accordance with the provisions of the Tax Treaty as referred to in Article 2 paragraph (2) and paragraph (4); and
3. A statement stating the applicant’s willingness to submit information as referred to in number 2) in a complete and timely manner.
Then, the Director General of Taxes follows up on requests for the implementation of the MAP submitted by the Applicant within one month from receipt. If the request for the implementation of the MAP can be followed up, the DGT will hold negotiations with the P3B Partner Authorities within 24 months.
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In the event that the negotiations produce a Joint Agreement, the Director General of Taxes follows up the results of the negotiations by issuing a Decree of the Director General of Taxes concerning the Joint Approval within one month. Requests for the implementation of the MAP are submitted using the available sample format, within a period of time according to P3B or a maximum of three years if not regulated in the P3B.
In connection with the P3B, the DGT also applies rules regarding the administrative process for taxpayers to get special P3B treatment. These rules are listed in the Regulation of the Director General of Tax Number PER-25 / PJ / 2018 concerning the Procedures for the Implementation of the Agreement on Avoidance of Double Taxation which took effect on January 1, 2019. This new regulation also also replaces the previous regulation stated in PER-10 / PJ / 2017 .
There are various points of change in this rule, namely the Certificate of Domicile of Foreign Taxpayers (DGT Form), the frequency of submission of DGT Forms, the submission channel of DGT Forms and the period and period of tax years on DGT Forms.
Principles of Arrangement | Old Rules | New Rules |
| Certificate of Domicile of Foreign Taxpayers (DGT Form) | Two types of forms are three pages each and two pages | One type of form is two pages |
| Frequency of DGT Form submission | Every month in the tax return period for each tax withholder | Once in the period covered by the DGT Form by the Tax Withholder / Taxpayer who first submitted the DGT Form |
| Channels for DGT Form Submission | Manually (legalized copy) | Electronically |
| Period and tax year in DGT Form | Maximum of 12 months, it is not possible to pass the calendar year (eg August – December 2018) | At most 12 months, it is possible to pass the calendar year (eg August 2018 – July 2019) |