News & Announcements


The Indonesian Minister of Finance (“MOF”) issued Regulation No. 22/PMK.03/2020 on Implementation Procedures for Advance Pricing Agreement (“MOF Regulation 22/2020”), revoking the previous MOF Regulation No. 7/PMK.03/2015 on the same subject matter.

Advance Pricing Agreement (“APA”) is a tax facility applicable to certain qualified taxpayers, which, if approved by the tax authority, will be concluded in the form of an agreement.

To improve the effectiveness of the APA mechanism implementation, MOF Regulation 22/2020 introduces certain adjustments and new features to the APA procedures, briefly summarized below:

  1. Period of APA

MOF Regulation 22/2020 extends the maximum period of APA to five years, from the previous maximum of four years, if it involves foreign tax authorities.

  1. Rollback

MOF Regulation 22/2020 introduces a new feature called “Rollback”, which, subject to certain conditions, allows the agreed terms and conditions of APA to be applied retroactively up to certain taxation years prior to the period of APA.

MOF Regulation 22/2020 does not specify the exact years of the Rollback’s period of applicability. However, it does state that the Rollback should not pass the tax assessment’s (penetapan pajak) statute of limitations, and the tax office should not have already issued the relevant corporate income tax assessment letter (surat ketetapan pajak PPH badan).

  1. APA Process

In comparison to the lengthier process under the previous MOF Regulation, MOF Regulation 22/2020 cuts down the APA application process into the following:

  1. Submission of APA application;
  2. Examination of APA application;
  3. Material review of APA application;
  4. Negotiation of APA; and
  5. Implementation of APA.

The new APA application process essentially removes the following from the previous process:

  1. Preliminary discussion;
  2. Invitation to submit the APA application; and
  3. Formation of the APA discussion team.
  1. More detailed definition of Related Party

To determine related party transactions eligible for APA, MOF Regulation 22/2020 sets a clearer and more detailed criteria of Related Party (in terms of legal entity) based on control elements as follows:

  1. One party is directly or indirectly controlling/being controlled by another party;
  2. Two or more parties are directly or indirectly controlled by one other party;
  3. One party is directly/indirectly involved in the managerial/operational decisions of two or more other parties;
  4. Parties who are commercially or financially known or have been declared as being under a single business group; or
  5. One party declares a special relationship with another party.


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