On 26 April 2019, the Minister of Finance (MoF) issued a new provision on the Mutual Agreement Procedure (MAP) with Regulation No. 49 / PMK.03 / 2019 (PMK-49). PMK-49 is effective from 26 April 2019 and repeals MoF Regulation No. 240 / PMK.03 / 2014 (PMK-240). PMK-49 is expected to implement in Indonesia the minimum standards contained in Action 14 of the OECD / G20 BEPS project to make dispute settlement mechanisms more effective. The new regulation contains the following changes:
- According to PMK 49, a domestic taxpayer, the Directorate General of Taxation (DGT) and a treaty partner’s competent authority (CA) must comply with specific deadlines during the MAP. The DGT will negotiate with CA within 24 months from the starting date of the MAP request.
- MAP negotiation can result in both agreement and some specified disagreement.
- The DGT should issue a Decision Letter within one month of the completion on the exchange of written notifications with the CA of a treaty partner, where the MAP result can be implemented by both parties.
- According to PMK-49, a request for information from a foreign CA should be sent directly to the DGT, however the PMK-49 leaves open the capacity for the DGT to collect information from all relevant parties. PMK-49 gives the DGT the right to cancel the MAP process when information gathering processes are not followed.
- Further, PMK-49 brings a procedure for a taxpayer to request a revocation of the MAP request. The DGT may reject a revocation request in certain conditions.
- Under PMK-49, all MAP submissions that are already in progress will be followed up by the DGT. It is not entirely clear that how the DGT will apply the time limits contained in PMK 49 to these on-going MAP cases.
