Regulation of the Minister of Finance (PMK) 213/2016, as amended by PMK 172/2023 concerning the application of the principles of fairness and business practices. The issuance of this regulation is motivated by the development of the business world and the increase in the volume of transactions between taxpayers who have special relationships.
The content of PMK 172/2023 includes several regulations related to taxpayer transactions affected by Special Relationships. This includes the application of the principle of fairness and business practice (PKKU) or arm’s length principle, advance pricing agreement (APA), secondary adjustment, Mutual Agreement Procedure (MAP), Value Added Tax (VAT) Treatment, types of documents and/or additional information in transactions affected by special relationships, as well as the implementation of mutual approval procedures.
It is hoped that PMK 172/2023 can provide justice, legal certainty, and facilitate the implementation of the rights and obligations of taxpayers.
This provision includes that there is no difference in the implementation of PKKU between domestic and cross-border transfer pricing, as well as corresponding adjustments are also contained in the PMK.
Based on this, companies in Indonesia are currently faced with challenges in implementing and adapting practices in accordance with these latest regulations. With a focus on determining fair transfer prices for parties with Privileged relationships, PMK 172/2023 demands more detailed treatment and stricter valuation methods.
By Tomy HO – Managing Partner TBrights
TBrights is a tax consultant in Indonesia which is currently an integrated business service in Indonesia that can provide comprehensive tax and business services.
Reference:
- Regulation of the Minister of Finance (PMK) Number 172 of 2023 concerning the Application of the Principles of Fairness and Business Practices in Transactions Influenced by Special Relationships
