Taxpayers may initiate a Mutual Agreement Procedure (MAP) to resolve cross-jurisdictional double taxation disputes. PMK Regulation Number 172 of 2023 stipulates this negotiation procedure as a means to prevent taxation that is inconsistent with the provisions of Double Taxation Avoidance Agreements (Tax Treaties). A company may file a MAP request concurrently with domestic dispute resolution efforts, such as an objection or a tax appeal. However, the Taxpayer is required to withdraw its domestic dispute proceedings if the competent authorities reach a MAP agreement first. Conversely, the Directorate General of Taxes shall utilize the court's decision as the basis for negotiation should the appeal verdict be issued prior to the conclusion of the MAP. .
In the world of international taxation, the biggest risk faced by multinational corporate groups is double taxation. This often occurs when tax authorities in two different countries make corrections on the same transaction, for example, transfer pricing corrections.
To overcome this deadlock, the legal instrument available in the Double Taxation Avoidance Agreement (P3B) is the Mutual Agreement Procedure (MAP). In Indonesia, the procedures for implementing MAP have been updated and unified through Regulation of the Minister of Finance Number 172 of 2023 (PMK 172/2023).
Taxpayers can request MAP if tax treatment by the Partner Tax Authority occurs that is not in accordance with P3B provisions, among others:
PMK 172/2023 allows Taxpayers to submit a MAP request simultaneously with the submission of an Objection, Appeal, or Reduction/cancellation of incorrect tax assessment letter application.
If the MAP negotiation results in an agreement before a domestic decision exists, then the MAP result can be applied. However, the Taxpayer must:
If the Appeal Decision or Judicial Review (PK) has been issued before MAP is finished, the DGT has two options:
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