The dispute is due to the application of strict transfer pricing rules in many countries, which often results in a unilateral correction of transfer prices by each country. This unilateral correction will certainly have an impact on the existence of economic double taxation. 27. The review of the application should be a cooperative procedure in which transfer pricing issues are openly discussed and access to relevant information and documents. The taxpayer provides the DGT with known (or should be known) information that may influence the outcome of the agreement in the APA without having to wait for a request from the DGT. Lack of cooperation in this regard may lead the DGT to refuse to continue the review of the application. 2. DGT found that in the event of significant difficulties or doubts in determining the method of applying the arm length principle, transfer pricing issues can be dealt with more effectively in real time if they occur, and not retroactively years later, for example. B key company staff. 38. The request for unilateral negotiation of the APA mentioned above must be submitted to the Director General of Taxes by the Director of International Taxation no later than ten (ten) working days from the date of the written notification that the bilateral APA has resulted in disagreements or has ended. In addition, the APA also aims to prevent double taxation, to avoid income being taxed everywhere (double tax) and to reduce administrative burdens for both taxpayers and tax authorities. In other words, the APA helps to properly resolve transfer pricing problems and provides a taxpayer-predicted process for resolving compensation disputes, which can be predicted by taxpayers (OECD, 1995).

36. If it is not possible to reach an agreement with the subject on the terms of an APA, a formal letter of notification of this disagreement will end. The DGT does not consider that it has an obligation to continue the discussion beyond the time it has found that it is not possible to reach an agreement. 4. The potential scope of an APP is flexible. It may relate to all issues related to the entity`s transfer pricing or be limited to one or more specific transactions. section 18, paragraph 3 bis, the Income Tax Act 1984 and its amendments, in order to agree on the criteria and/or to determine in advance the gain in arm length or the gain in arm length. On the basis of the parties concerned, the APA can be divided into three types (Sawyer, 2004), namely unilaterally, bilaterally and multilaterally.

The unilateral APA is a binding agreement between a subject and a single tax administration. This species is generally rejected by tax authorities and does not offer guarantees to taxpayers to avoid double taxation. 45. In some cases, the APA may provide for a review of its conditions in certain circumstances; For example, some change in the structure of the business or the economic situation complicates the application of the agreed methodology. Therefore, the agreement can be amended with the agreement of the parties to resolve this difficulty. In such cases, the APA may be revised in accordance with Article 19 of pmK-22/2020, which is carried out by the implementation of the provisions of Article 6 (verification of comprehensiveness and eligibility) to Article 15 (negotiation). According to tax authorities and taxpayers, the APA is an alternative to the problem of transfer pricing, as well as a way to avoid confrontation between tax administrations and taxpayers and to avoid disputes between a country`s tax administration and other public tax authorities (Calderon, 1998). Jakarta, March 26, 2020 – The application for a pre-price agreement (APA) of March 18, 2020 can be filed by formal application, without prior recourse and the completeness of the documents filed after the application, in order to follow the application of APP.