Page 8 - Newsletter (Recent Regulations on Tax Holiday Incentives and Super Tax Deduction for R&D Activities)

DDTC Newsletter Vol.04 | No.08 I October 2020 Page 8 of 13

Recent Regulations on Tax Holiday Incentives and
Super Tax Deduction for R&D Activities

in the annual corporate income tax returns for three information or evidence that is not in accordance with
tax years prior to the APA application. The profit rate the actual conditions and the taxpayer does not convey
is obtained from the ratio between profit before taxes information/evidence which is known to the taxpayer
and business turnover or the ratio between profit and may affect the outcome of the agreement in APA.
before taxes and total costs.
This request for clarification is notified in writing by
Third, the process of requesting unilateral APA the Director General of Taxes. Requests for clarification
negotiations. Taxpayers that revoke the bilateral APA must be responded in writing to the Director of
application may apply for unilateral APA negotiations. International Taxation within 15 days after it is sent
The application for unilateral APA negotiations can by post. The Director General of Taxes may cancel
be submitted within 10 working days as of the date the agreement in APA if the taxpayer does not submit
of receipt of written notification from the Director of a written response or submits a written response
International Taxation. beyond the specified period.
A request for unilateral APA negotiations can be The Director of International Taxation will re-conduct
made between the Director General of Taxes and the research on the written response submitted by
taxpayer within 6 months if bilateral APA negotiations the taxpayer. In this research, the Director General
have been conducted and 12 months if bilateral APA of Taxes may cancel the agreement in the APA by
negotiations have not been conducted. This period issuing a decree to cancel the agreement in the APA
commences from the date of receipt of the request for to the taxpayer within 15 working days. This period
unilateral APA negotiations. commences from the receipt of the taxpayer’s written
response and the period the written response has
Fourth, the process of evaluating the APA agreement
been exceeded.
by the Director General of Taxes. This evaluation
process includes evaluation of compliance with the Considering the ongoing Covid-19 pandemic that
implementation of the APA agreement and evaluation strikes Indonesia, the Director General of Taxes grants
of the conformity of the criteria in determining the special policies for taxpayers affected by Covid-19.
transfer pricing with the decision to implement APA. Taxpayers with businesses affected by Covid-19 may
make adjustments to financial report projections
If the taxpayer is found to have violated the agreement
under normal conditions.
in the APA, the Director General of Taxes will strictly
follow up as per the provisions of the applicable tax The form for adjusting financial report projections
statutory provisions. Based on the results of the is contained in the appendix that is attached with
evaluation, the Director General of Taxes may cancel an elucidation of the financial report projections.
or review the agreement in APA before the APA period Taking effect on 17 September 2020, this regulation
ends. revokes the previous regulation, i.e. PER-69/PJ/2010
concerning Advance Pricing Agreement.
Fifth, the process of reviewing material changes.
The Director General of Taxes may review APA if
material changes are found in the facts and conditions
of controlled transactions in APA based on agreed Reduction of the Types of Goods
Related to the Handling of Covid-19
critical assumptions. This review must be preceded
by written notification regarding material changes Entitled to Import Facilities
and the implementation of APA negotiations subject to
review from the Director of International Taxation to
The Ministry of Finance stipulates the second
the Taxpayer.
amendment to the provisions on the granting of
This written notification must be submitted before the customs and/or excise and taxation facilities on
APA tax year ends. In addition, the taxpayer may apply imported goods to be used for handling the 2019
for a review by applying for an APA review. The review Corona Virus Disease (Covid-19) pandemic.
request will be equated with an APA application that
This policy is outlined in the Minister of Finance
has met the requirements.
Regulation No. 149/PMK.04/2020 concerning the
Sixth, the data clarification process. The taxpayer Second Amendment to the Minister of Finance
will be asked to clarify if some indications are found Regulation No. 34/PMK.04/2020 concerning the
in the evaluation results. The indications refer to Granting of Customs and/or Excise and Taxation