Introduction APA

1. Directorate General of Taxes (DGT) has established the Advance Pricing Agreement (APA) program in Indonesia since 2010 to assist Taxpayers in determining their transfer pricing policy for affiliated transactions, thereby preventing potential transfer pricing disputes in the future that might otherwise result in a Mutual Agreement Procedure (MAP).
2. This APA Guidance serves as general guidance for both Taxpayers as well as our Treaty Partners considering entering into the APA program. Accordingly, it should be read in conjunction with the Regulation of the Minister of Finance Number PMK172/2023 on The Implementation of the Arm’s Length Principles in Transactions Influenced by a Special Relationship.

An APA is a written agreement made between:

1. Director General of Taxes and the Taxpayer; or
2. Director General of Taxes and the Competent Authority of the Treaty Partner involving the related Taxpayers, as referred to in Article 18 Paragraph (3a) Income Tax Law of 1984 and its amendments thereto in order to agree upon the criteria and/or determine the arm's length price or arm's length profit in advance.

1. To address transfer pricing issue more effectively before it arise, thus Taxpayer able to determine the appropriate implementation of transfer pricing issue within their affiliated transaction.
2. Helps prevent potential future disputes regarding transfer pricing issues and avoids double taxation.
3. To encompass all transfer pricing issues within the business or be limited to one or more specific transactions.

Note: The DGT does not charge business for its assistance during the APA program. All services provided by the DGT throughout the APA process are free of charge.