(4) Sales Price Adjustment to Calculate VAT

Article 39 PMK 172/2023 regulates that the DJP has the authority to make sales or replacement price adjustments that are affected by special relationships to calculate the VAT payable. Selling price adjustments can also be made if there is a primary adjustment that can be allocated to each transaction for the delivery of taxable goods (BKP) and/or taxable services (JKP).

In accordance with the provisions of Article 2 of the VAT Law, PMK 172/2023 also regulates that adjustments are made for selling or replacement prices that are lower than the fair market price. The adjustments are calculated on the basis of the fair market price at the time of sale of BKP and/or JKP.

Furthermore, adjustments to the selling price or reimbursement to taxable entrepreneurs (PKP) sellers or service providers do not result in adjustments to the input tax (PM) for the buyer's PKP. PKP buyers can still credit PM as long as they meet the credit conditions. Apart from that, please note that the provisions for calculating VAT as intended only apply to domestic sales, while sales abroad are not subject to VAT.

(5) Time Period and Threshold for Preparing TP Documentation

In connection with the preparation of TP Documentation, PMK 172/2023 adds provisions in Article 34 paragraph (2) that TP Documentation must be fulfilled no later than 1 (one) month after the request is submitted for the purpose of supervision or inspection. The time period for submitting other TP Documentation is set fixed, namely 4 (four) months after the end of the tax year for master documents (Master File or MF) and local documents (Local File or LF) and 12 (twelve) months after the end of the tax year for reports per country (Country by Country Report or CbCR).

Apart from that, there are changes to the provisions for determining the threshold for making CbCR. Previously, the CbCR was prepared if the taxpayer had achieved a consolidated gross turnover of at least IDR 11 trillion in the relevant tax year. However, with the ratification of PMK 172/2023, CbCR obligations are determined in the tax year before the reporting year with the same consolidated gross turnover value limits. Thus, the current obligation to make CbCR is similar to making MF and LF, namely based on the previous tax year.

(6) New MAP Regulation

PMK 172/2023 regulates MAP provisions in a more technical manner. An important part of the MAP provisions is the transition from the MAP decision letter (MAP SK) to the MAP results. Previously, the MAP SK was followed up by amending Article 16 of the Law on General Provisions and Tax Procedures (KUP Law).

PMK 172/2023 also introduces a new term, namely Mutual Agreement decision letter (SKPB). SKPB is used as the basis for billing and refunds. Apart from that, SKPB is also used in calculating the amount of tax in the Tax Bill (STP).

 

(7) Multilateral APA and Roll-back APA

In general, the APA provisions are the same as those regulated in the previous provisions, namely PMK 22/2020. However, there is an addition in PMK 172/2023, namely regarding Multilateral APA. Multilateral APA is a transfer price agreement between the DJP and more than 1 (one) Double Taxation Avoidance Agreement (P3B) Partner Authorized Official which is implemented based on the request of the domestic Taxpayer.

The existence of a multilateral APA accommodates the needs of Taxpayers who transact with more than 2 (two) countries. Multilateral APAs can also be used in discussions on Pillar I of the Base Erosion and Profit Shifting (BEPS) Action Plan, which aims to provide justice for countries which are destination markets for digital goods and services.

Furthermore, PMK 172/2023 also regulates the elimination of STP sanctions for the implementation of APA implementation backwards or also known as APA roll-back. Roll-back is the application of the results of an agreement in the APA for the tax year before the APA period. To roll back APA, there are several conditions that must be met, including:

1. The facts and circumstances of affiliate transactions do not differ materially;
2. The determination has not expired;
3. SKP not yet issued; And
4. Not investigated or subject to tax crimes.

For your information, DJP will conduct an APA evaluation within 5 (five) years of its implementation. If APA is not applied consistently, corrections will be made. However, if it is deemed still relevant, the APA can be extended for another 5 years. Thus, roll-back can allow use of APA for up to 10 years, namely 5 years before and 5 years after the APA period.

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