per-48 thn 2010 ttg mutual agreement procedure - english

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Indonesian

Type: REGULATION (PER)

By: THE DIRECTOR GENERAL OF TAXATION (DIRGENTAX)

Number: PER-48/PJ/2010

Date: NOVEMBER 3, 2010 (JAKARTA)

Title: GUIDELINES FOR IMPLEMENTATION OF MUTUAL AGREEMENTPROCEDURE BASED ON DOUBLE TAXATION AVOIDANCE AGREEMENT

THE DIRECTOR GENERAL OF TAXATION,

Considering:

a. whereas based on Article 32A of Law Number 7 Year 1983 regarding IncomeTax as several times amended most recently by Law Number 36 Year 2008 it isstipulated that Government shall be authorized to establish agreement with theGovernment of other country in the context of double taxation avoidance andprevention from tax evasion;

b. whereas in Double Taxation Avoidance Agreement between the Government of Indonesia and the Government of partner country, Mutual Agreement Procedure(MAP) shall be stipulated;

c. whereas to implement the provisions in Double Taxation Avoidance Agreementin respect of the said Mutual Agreement Procedure, it is necessary to stipulate a

standard procedure as technical directives for its implementation;

d. whereas based on the considerations as intended in points a, b, and c, it isnecessary to stipulate a Regulation of the Director General of Taxation regardingGuidelines for Implementation of Mutual Agreement Procedure Based on DoubleTaxation Avoidance Agreement;

In View of:

1. Law Number 6 Year 1983 regarding General Taxation Provisions andProcedures (State Gazette of the Republic of Indonesia Year 1983 Number 49,Supplement to the State Gazette of the Republic of Indonesia Number 3262) asamended several times most recently by Law Number 16 Year 2009 (State

Gazette of the Republic of Indonesia Year 2009 Number 62, Supplement to theState Gazette of the Republic of Indonesia Number 4999);

2. Law Number 7 Year 1983 regarding Income Tax (State Gazette of the Republicof Indonesia Year 1983 Number 50, Supplement to State Gazette of theRepublic of Indonesia Number 3263) as amended several times most recently byLaw Number 36 Year 2008 (State Gazette of the Republic of Indonesia Year2008 Number 133, Supplement to State Gazette of the Republic of IndonesiaNumber 4893);



HAS DECIDED:

To Stipulate: REGULATION OF THE DIRECTOR GENERAL OF TAXATIONREGARDING GUIDELINES FOR IMPLEMENTATION OFMUTUAL AGREEMENT PROCEDURE BASED ON DOUBLETAXATION AVOIDANCE AGREEMENT.

CHAPTER IGENERAL PROVISIONS

Article 1

Referred to herein as:1. Double Taxation Avoidance Agreement, hereinafter referred to as P3B, shall be

an agreement between the Government of Indonesia and Government of partnercountry or of partner jurisdiction to prevent from double taxation and tax evasion.

2. Mutual Agreement Procedure, hereinafter referred to as MAP, shall be

administrative procedure that is stipulated in P3B to settle issues arising out ofthe enforcement of P3B.

3. Authorized Official shall be the officials as intended in P3B.

4. Partner Country of P3B shall be country or jurisdiction entering into P3B withIndonesia that has come into effect effectively.

5. Mutual Agreement shall be the result already agreed upon by AuthorizedOfficials of Indonesia and Partner Country of P3B in respect of MAP alreadyimplemented.

6. Indonesian Resident Taxpayer shall be resident Tax Subject based on the

provisions of Law Number 7 Year 1983 regarding Income Tax as several timesamended most recently by Law Number 36 Year 2008, that receives or earnsincome that is imposed with tax based on the law.

7. Resident Taxpayer of Partner Country of P3B shall be resident Tax Subject ofPartner Country of P3B based on the provisions of laws on taxation in force inthe country concerned, which receives or earns income imposed with IncomeTax in such country.

8. Foreign Taxpayer shall be foreign Tax Subject based on the provisions of LawNumber 7 Year 1983 regarding Income Tax as several times amended mostrecently by Law Number 36 Year 2008, that receives or earns incomes imposedwith tax based on the law.

9. Indonesian National shall be Indonesian National based on the provisions oflaws in the field of nationality.

10. Law regarding General Taxation Provisions and Procedures, hereinafter referredto as Law on KUP, shall be Law Number 6 Year 1983 regarding GeneralTaxation Provisions and Procedure as several times amended most recently byLaw Number 16 Year 2009.

11. Transfer Pricing shall be the determination of price conducted in transaction



between parties possessing a special relation.

12. Corresponding Adjustments shall be correction or adjustment of amount of taxpayable to Taxpayer of a country possessing a special relation with Taxpayer ofpartner country, that is conducted by tax authority of the country concerned inrespect of correction of Transfer Pricing that is conducted by tax authority ofpartner country ( primary adjustments), so that allocation of profits in the twocountries or jurisdictions is consistent, with a view to eliminating double taxation.

13. Dual Residence shall be condition that is faced by one tax subject that performstransaction inter country or inter jurisdiction that at the same time is deemed tobecome resident tax subject in each country or jurisdiction based on theprovisions of laws on taxation applicable in each country or jurisdiction.

Article 2

MAP shall be implemented in the event that there is:a. request filed by Indonesian Resident Taxpayer;

b. request filed by Indonesian National becoming Resident Taxpayer of PartnerCountry of P3B in respect of the provisions on non-discrimination in theapplicable P3B;

c. request filed by Partner Country of P3B; or

d. matters deemed necessary by and upon the initiative of the Director General ofTaxation.

CHAPTER IIPROCEDURE FOR FILING AND IMPLEMENTATION OF MAP FROM INDONESIAN

RESIDENT TAXPAYER OR INDONESIAN NATIONAL BECOMING RESIDENTTAXPAYER OF PARTNER COUNTRY OF P3B

Article 3

(1) Request for implementing MAP as intended in Article 2 sub-article a shall beconducted, among other things, in the event that:

a. Indonesian Resident Taxpayer is imposed with tax or will be imposedwith tax because of performing Transfer Pricing practice in connectionwith transaction with Resident Taxpayer of Partner Country of P3Bpossessing a special relation;

b. Indonesian Resident Taxpayer deems that action of Partner Country of P3B results in or will result in tax imposition not in accordance with theprovisions of P3B in respect of the existence or income of permanent

establishment owned by Indonesian Resident Taxpayer in PartnerCountry of P3B;

c. Indonesian Resident Taxpayer deems that action of Partner Country of P3B results in or will result in tax imposition not in accordance with theprovisions of P3B in respect of tax withholding in Partner Country of P3B;or

d. Indonesian Resident Taxpayer that also constitutes Resident Taxpayer ofPartner Country of P3B asks for implementation of consultancy in the



context of MAP to determine his status as Resident Taxpayer of one ofthe countries.

(2) Request for implementing MAP as intended in Article 2 sub-article b shall beconducted in the event that Indonesian National already becoming ResidentTaxpayer of Partner Country of P3B is imposed or will be imposed with tax inPartner Country of P3B that is larger than that imposed by Partner Country of P3B to its national (non-discrimination case based on the provisions of theapplicable P3B).

(3) Request for implementing MAP as intended in paragraphs (1) and (2) shall beconducted with due observance of the provisions in the applicable P3B.

Article 4

(1) Request for implementing MAP as intended in Article 2 sub-article a shall bedelivered in written application to the Director General of Taxation c.q. the Headof Tax Service Office where the Taxpayer is registered by giving information atleast on:

a. name, Taxpayer Registration Number, address, and type of business ofIndonesian Resident Taxpayer who files request;

b. name, Identity Number of Taxpayer, address, and type of business ofTaxpayer in Partner Country of P3B possessing a special relation withTaxpayer who files request, special in respect of transaction of TransferPricing ;

c. actions already taken by Resident Taxpayer of Partner Country of P3B or tax authority of Partner Country of P3B, deemed not in accordance withthe provisions of P3B by Indonesian Resident Taxpayer;

d. explanation whether Indonesian Resident Taxpayer has filed or will file

application for correction, objection, application for appeal to tax court, or application for reduction or cancellation of tax assessment letter, asintended in Article 16 paragraph (1), Article 25 paragraph (1), Article 27paragraph (1), or Article 36 paragraph (1) sub-paragraph b of Law onKUP, on matters the MAP of which is requested;

e. Fiscal Year in respect of request conducted by Indonesian ResidentTaxpayer;

f. explanations on transaction already corrected by tax authority of PartnerCountry of P3B, that cover substance of transaction, value of correction,and basis for correction;

g. opinion of Indonesian Resident Taxpayer in respect of correction alreadyconducted by authority of Partner Country of Indonesian P3B;

h. parties who can be contacted by the Directorate General of Taxation inthe context of following up request for implementing MAP alreadydelivered by Indonesian Resident Taxpayer;

i. name of tax office of Partner Country of P3B, if possible, name of thecompetent vertical unit of tax office of Partner Country of P3B if known byIndonesian Resident Taxpayer who files MAP request; and



j. the provisions in P3B that according to Indonesian Resident Taxpayer are not enforced correctly and opinion of Indonesian Resident Taxpayer on the enforcement of the provisions of P3B, if MAP request relates tothe enforcement of the provisions of P3B that is not appropriate.

(2) Request as intended in paragraph (1) must be signed by Indonesian ResidentTaxpayer or by his authorized proxy based on the provisions of Law on KUP,and in the event of being signed by proxy, it must be enclosed by special powerof attorney.

(3) Request as intended in paragraph (1) must be enclosed by support documentsand shall be delivered within the period stipulated in the applicable P3B, that iscalculated after Indonesian Resident Taxpayer is imposed or will be imposedwith tax not in accordance with the provisions in P3B.

(4) The Head of Tax Service Office must examine the completeness of request asintended in paragraph (1) and must complete it with the related tax documentsavailable in administration of Tax Service Office, to be then forwarded to the

Director of Taxation Regulations II by no later than 30 (thirty) calendar days asfrom request for implementing MAP is received completely.

(5) In the event that request for MAP is delivered incompletely, the Head of TaxService Office shall give Taxpayer a notification within a maximum period of 15(fifteen) calendar days as from request for implementing MAP is received, thatdeclares that the request for implementing MAP is incomplete and shall ask for Taxpayer to complete the incomplete items.

(6) The Director of Taxation Regulations II shall examine and consider request for implementing MAP as intended in paragraph (1).

(7) In the event that the request as intended in paragraph (1) can be processed

further to be consulted with the Authorized Official in Partner Country of P3B, theDirector of Taxation Regulations II shall deliver MAP request in writing to Authorized Official in Partner Country of P3B.

(8) The Director of Taxation Regulations II on behalf of the Director General ofTaxation shall reject request for implementing MAP as intended in paragraph (1),in the event that:

a. request as intended in paragraph (1) is delivered after exceeding the timelimit for delivery as intended in paragraph (3);

b. Indonesian Resident Taxpayer files application for objection to theDirector General of Taxation on issues the MAP of which is requested

and does not revoke the said application for objection; or

c. Indonesian Resident Taxpayer files application for appeal to tax court onissues the MAP of which is requested and does not revoke the said Appeal application;

within a maximum period of 15 (fifteen) calendar days as from request forimplementing MAP is received from the Head of Tax Service Office or as from itis known that the Taxpayer concerned files objection request to the DirectorGeneral of Taxation or appeal request to tax court.



(9) The Director of Taxation Regulations II can ask for further explanation toIndonesian Resident Taxpayer, including ask for support documents andnecessary information, as well as can ask for information or help from otherdirectorate, technical implementation unit and/or vertical unit within theDirectorate General of Taxation.

Article 5

(1) Request for implementing MAP as intended in Article 2 sub-article b shall bedelivered in written application to the Director General of Taxation c.q. theDirector of Taxation Regulations II by giving information at least on:

a. name, address, and business activity of Indonesian National who filesrequest;

b. action or tax imposition already conducted by tax authority of PartnerCountry of P3B that is deemed heavier than action or tax impositionconducted by the said tax authority of Partner Country of P3B to its

nationals;

c. Fiscal Year in respect of request conducted;

d. parties who can be contacted by the Directorate General of Taxation inthe context of following up application already delivered by the concernedparty; and

e. name of tax office of Partner Country of P3B, if possible, name of thecompetent vertical unit of tax office of Partner Country of P3B if known bythe concerned party.

(2) Request as intended in paragraph (1) must be enclosed by support documents

and shall be delivered within the period stipulated in the applicable P3B, which iscalculated after the concerned party is imposed or will be imposed with tax not inaccordance with the provisions in P3B.

(3) The Director of Taxation Regulations II shall examine and consider request forimplementing MAP as intended in paragraph (1).

(4) In the event that the request as intended in paragraph (1) can be processedfurther to be consulted with the Authorized Official in Partner Country of P3B, theDirector of Taxation Regulations II shall deliver request for implementing MAP inwriting to the Authorized Official in Partner Country of P3B.

(5) The Director of Taxation Regulations II on behalf of the Director General of

Taxation shall reject request as intended in paragraph (1) in the event that therequest for implementing MAP is delivered after exceeding the period asintended in paragraph (2) or the said request for implementing MAP is not inaccordance with the provisions in the applicable Indonesian P3B, within amaximum period of 15 (fifteen) calendar days as from request for implementingMAP is received.

Article 6

(1) In the event that Indonesian Resident Taxpayer who files request for



implementing MAP also files application for correction or application for reductionor for cancellation of tax assessment letter as intended in Article 16 paragraph(1) or Article 36 paragraph (1) sub-paragraph b of Law on KUP, the DirectorGeneral of Taxation can process the MAP request.

(2) In the event that the implementation of MAP generates Mutual Agreement beforethe issuance of decision on application for correction or application for reductionor for cancellation of tax assessment letter as intended in paragraph (1), the saidMutual Agreement shall be set out in decision of the Director General of Taxationon application for correction or application for reduction or for cancellation of taxassessment letter.

(3) In the event that the implementation of MAP does not yet generate Mutual Agreement and the Indonesian Resident Taxpayer concerned files objectionapplication to the Director General of Taxation or appeal application to tax court,the Director General of Taxation shall stop the implementation of MAP and shallnotify Taxpayer in writing, within a maximum period of 15 (fifteen) calendar daysas from it is known the Taxpayer concerned files objection application to theDirector General of Taxation or appeal application to tax court.

Article 7

(1) If deemed necessary, the Directorate General of Taxation can hold meeting of consultancy with Authorized Official of Partner Country of P3B to follow up MAPrequest conducted by Indonesian Resident Taxpayer or Indonesian Nationalalready becoming Resident Taxpayer of Partner Country of P3B.

(2) Before reaching Mutual Agreement, the Director General of Taxation shall inadvance deliver written notification to Indonesian Resident Taxpayer or Indonesian National already becoming Resident Taxpayer of Partner Country of P3B regarding content of draft Mutual Agreement to obtain confirmation that theconcerned party can receive the content of draft Mutual Agreement.

(3) The Director General of Taxation shall agree to Mutual Agreement with PartnerCountry of P3B after Indonesian Resident Taxpayer or Indonesian Nationalalready becoming Resident Taxpayer of Partner Country of P3B givesconfirmation that the concerned party can accept the said consensus.

(4) Confirmation as intended in paragraph (3) must be given within a maximumperiod of 30 (thirty) calendar days as from notification as intended in paragraph 2is delivered.

(5) In the event that Mutual Agreement results in the change of amount of taxpayable in Indonesia as set out in tax assessment letter, Statement of Correction, and in Statement of Reduction or in Statement of Cancellation of tax

assessment letter, the Director General of Taxation shall perform correction,reduction or cancellation of tax assessment letter or the said statement inaccordance with the applicable provisions.

(6) The Director General of Taxation shall deliver Mutual Agreement to Taxpayer inwriting.

Article 8

(1) The Director General of Taxation shall stop the implementation of MAP in the



event that:

a. Indonesian Resident Taxpayer or Indonesian National already becomingResident Taxpayer of Partner Country of P3B who delivers request forimplementing MAP:

1) delivers letter of cancellation of MAP request to the DirectorGeneral of Taxation;

2) does not approve the content of draft Mutual Agreement;

3) does not fulfi ll all requests of data, information, or documentsneeded by the Director General of Taxation;

4) gives incorrect information to the Director General of Taxation; or

b. Indonesian Resident Taxpayer who delivers request for implementingMAP files objection application to the Director General of Taxation or appeal application to tax court.

(2) The Director General of Taxation shall give Taxpayer written notification on thecessation of implementation of MAP, within a maximum period of 15 (fifteen)calendar days as from the cessation is decided upon.

Article 9

The Procedure for Filing and Implementation of MAP from Indonesian ResidentTaxpayer or Indonesian National Becoming Resident Taxpayer of Partner Country of P3B shall be as set out in Attachment I hereto constituting an integral part hereof.

CHAPTER IIIPROCEDURE FOR HANDLING MAP REQUEST FROM PARTNER COUNTRY OF

P3B Article 10

(1) Request for implementing MAP as intended in Article 2 sub-article c shall beconducted among other things, in the event that:

a. The Director General of Taxation issues tax assessment letter to ForeignTaxpayer who conducts business or activity through permanentestablishment in Indonesia that is deemed not in accordance with theprovisions in P3B;

b. correction of Transfer Pricing is made in Indonesia to Foreign Taxpayer who conducts business or activity through permanent establishment in

Indonesia;

c. Partner Country of P3B asks for Corresponding Adjustments in respect of correction of Transfer Pricing conducted by Tax authority of the stateconcerned to its resident Taxpayer who performs transaction of specialrelation with Indonesian Resident Taxpayer;

d. there is tax withholding by Taxpayer in Indonesia in respect of incomeoriginating from Indonesia deemed not in accordance with the provisionsin P3B; or



e. determination of state of domicile of Taxpayer possessing status asIndonesian Resident Taxpayer and Resident Taxpayer of PartnerCountry of P3B (Dual Residence).

(2) The Director General of Taxation can reject MAP request f iled by PartnerCountry of P3B in respect of correction of Transfer Pricing conducted by thePartner Country of P3B concerned, in the event that there is no provision onCorresponding Adjustments in the applicable Indonesian P3B.

Article 11

(1) The Director General of Taxation c.q. the Director of Taxation Regulations IIshall notify request for implementing MAP as intended in Article 2 sub-article c tothe Head of Tax Service Office where the Taxpayer relating to the said request isregistered.

(2) Notification as intended in paragraph (1) shall cover information on:

a. name of Partner Country of P3B who files request for implementing MAP;

b. date of receipt of MAP request;

c. name, Taxpayer Registration Number, and address of permanentestablishment or related resident Taxpayer;

d. name and address of Resident Taxpayer of Partner Country of P3Binvolved, in the case of Transfer Pricing ; and

e. name and address of the related Taxpayer as well as Tax Year to bediscussed in Dual Residence case.

Article 12

(1) The Director General of Taxation shall reject MAP request as intended in Article2 sub-article c for MAP request in respect of Corresponding Adjustments in theevent that the related Indonesian Resident Taxpayer files no MAP request to theDirector General of Taxation.

(2) The Director of Taxation Regulations II on behalf of the Director General ofTaxation shall ask for statement in writing from Indonesian Resident Taxpayer tomake sure that the concerned party files no MAP request.

Article 13

In the event that the subject of request MAP from Partner Country of P3B is withholdingor collection of Income Tax by Taxpayer in Indonesia that is deemed not in accordancewith the provisions of P3B, the Director of Taxation Regulations II shall deliver in writingto the said Taxpayer as to MAP request from Partner Country of P3B and can ask for explanations on basis for tax withholding or collection, substance of transaction, andcan ask for the necessary documents through Tax Service Office where the Taxpayer isregistered.

Article 14



In following up MAP request as intended in Article 2 point c, the Director of TaxationRegulations II can ask for information or help from other directorate, technicalimplementation unit and/or vertical unit within the Directorate General of Taxation.

Article 15

(1) In the event that MAP request as intended in Article 2 sub-article c relates topermanent establishment in Indonesia and the said permanent establishmentalso files application for correction or application for reduction or cancellation oftax assessment letter as intended in Article 16 paragraph (1) or Article 36paragraph (1) sub-paragraph b of Law on KUP, the Director General of Taxationcan implement MAP and can process application for correction or application forreduction, or for cancellation of tax assessment letter.

(2) In the event that the implementation of MAP generates Mutual Agreement beforethe issuance of decision to application for correction or application for reductionor for cancellation of tax assessment letter as intended in paragraph (1), the saidMutual Agreement shall be set out in decision of the Director General of Taxationupon the application for correction or application for reduction or for cancellation

of tax assessment letter.

(3) In the event that the implementation of MAP does not yet generate Mutual Agreement and the Taxpayer related to request for enforcing MAP files objectionapplication to the Director General of Taxation or appeal application to tax court,the Director General of Taxation shall stop the implementation of MAP and shallnotify Partner Country of P3B that files request for MAP in writing.

Article 16

(1) If deemed necessary or upon the request of Partner Country of Indonesian P3B,the Directorate General of Taxation can hold meeting of consultancy with theconcerned Authorized Official of Partner Country of P3B to follow up MAP

application conducted by the said partner country.

(2) In the event that the Director General of Taxation agrees to Mutual Agreementwith Partner Country of P3B, the Director of Taxation Regulations II shallimmediately give notification in writing to the Head of Tax Service Office wherethe competent Taxpayer is registered.

(3) The Head of Tax Service Office shall immediately deliver Mutual Agreement inwriting to the related Taxpayer.

(4) In the event that Mutual Agreement results in change of amount of tax payable inIndonesia in tax assessment letter, Statement of Correction, and in Statement of Reduction or in Statement of Cancellation of tax assessment letter, the Director

General of Taxation shall perform correction, reduction or cancellation of taxassessment letter or the said statements in accordance with the applicableprovisions.

(5) In the event that Mutual Agreement deals with withholding or collection ofIncome Tax in Indonesia, its follow up can be conducted based on the procedureor method of restitution of tax that should not be payable, in accordance with theapplicable provisions.

Article 17



(1) The Director General of Taxation can reject or stop the implementation of MAPin the event that:

a. MAP request is delivered by Partner Country of P3B after the time limit ofimplementation of MAP as stipulated in P3B;

b. substance of application filed by Partner Country of P3B is not included inthe scope of MAP as stipulated in the applicable P3B;

c. Partner Country of P3B cancels MAP request;

d. request for implementing MAP relates to permanent establishment inIndonesia and the said permanent establishment files application forobjection to the Director General of Taxation or application for appeal totax court;

e. Indonesian Resident Taxpayer related to MAP request in respect of correction of Transfer Pricing conducted by tax authority of Partner

Country of P3B to its Resident Taxpayer, files no MAP application;

f. Taxpayer whose tax assessment letter is issued by the DirectorateGeneral of Taxation becoming focus of MAP request does not give all thenecessary documents;

g. The Directorate General of Taxation cannot possibly collect documentsnecessary to perform consultancy in the context of MAP because thelapse of a long time after the issuance of tax assessment letter inIndonesia; or

h. there is sound indication that the implementation of consultancy in thecontext of MAP will not generate the appropriate decision.

(2) In the event that the Director General of Taxation and Authorized Official ofPartner Country of P3B agrees to stop the implementation of MAP, the Directorof Taxation Regulations II shall convey written notification to the relatedTaxpayer.

Article 18

The Procedure for Handling MAP Request of Partner Country of P3B shall be as set outin Attachment II hereto constituting an integral part hereof.

CHAPTER IVIMPLEMENTATION OF MAP UPON THE INITIATIVE OF THE DIRECTOR GENERAL

OF TAXATION Article 19

The Director General of Taxation can file request for implementing MAP as intended in Article 2 sub-article d without being based on request from Indonesian ResidentTaxpayer or from Partner Country of P3B, to:

a. review Mutual Agreement already agreed upon before because there isindication of inaccurate information or documents delivered by IndonesianResident Taxpayer or Partner Country of P3B;



b. ask for Corresponding Adjustments of correction of Transfer Pricing conductedby the Directorate General of Taxation to Indonesian Resident Taxpayer inrespect of transaction of special relation with Resident Taxpayer of PartnerCountry of P3B;

c. make interpretation of a certain provision in P3B that is necessary in theimplementation of the P3B concerned; or

d. conduct other necessary matters in the context of implementing the provisions ofP3B.

Article 20

The Director of Taxation Regulations II can ask for documents and/or additionalinformation in respect of MAP as intended in Article 19, from Indonesian ResidentTaxpayer or through Tax Service Office where the Indonesian Resident Taxpayer isregistered.

Article 21

(1) In the event that the Director General of Taxation files request for implementingMAP to Partner Country of P3B as intended in Article 19 relating to IndonesianResident Taxpayer, the Director of Taxation Regulations II shall notify in writingthe related Indonesian Resident Taxpayer:

a. date of filing of request for implementing MAP;

b. name of the related Partner Country of P3B;

c. substances filed in MAP request;

d. argumentation of filing of MAP request; and

e. necessary other information.

(2) If deemed necessary, the Directorate General of Taxation can hold meeting ofconsultancy with Authorized Official of Partner Country of P3B to follow up MAPas intended in Article 19.

(3) In the event of reaching Mutual Agreement with Partner Country of P3B relatingto Indonesian Resident Taxpayer, the Director of Taxation Regulations II shalldeliver the Mutual Agreement in writing to the related Indonesian ResidentTaxpayer.

(4) In the event that the implementation of MAP relating to Indonesian ResidentTaxpayer is ceased without generating Mutual Agreement with Partner Countryof P3B, the Director of Taxation Regulations II shall give notification on cessationof MAP to the related Indonesian Resident Taxpayer.

Article 22

The Procedure for Implementation of MAP at Initiative of the Director General ofTaxation shall be as set out in Attachment III hereto constituting an integral part hereof.



CHAPTER VIMPLEMENTATION OF CONSULTANCY IN THE CONTEXT OF MAP

Article 23

(1) Meeting of consultancy in the context of MAP as intended in Article 7 paragraph(1), Article 16 paragraph (1), and Article 21 paragraph (2) shall be held by theDirectorate of Taxation Regulations II or by Executor Team/Delegation of Negotiator that is set up by the Director General of Taxation by consideringinputs from the Director of Taxation Regulations II.

(2) The Director of Taxation Regulations II shall give inputs to the Director Generalof Taxation as to directorate, technical implementation unit, and/or vertical unitwithin the Directorate General of Taxation relating to issues to be discussed inthe implementation of MAP to become part of Executor Team /NegotiatorDelegation.

(3) The Directorate of Taxation Regulations II or Executor Team/ NegotiatorDelegation shall prepare position of the Directorate General of Taxation in theimplementation of MAP and shall implement MAP in accordance with position

stipulated by the Director General of Taxation.

Article 24

(1) In the event that request for implementing MAP relates to correction of TransferPricing , the Director General of Taxation can set up Special Team in charge ofpreparing position ( position paper ) of the Directorate General of Taxation,performing coordination as well as supervision on units relating to request forimplementing MAP in respect of correction of Transfer Pricing , and becomingmember of negotiator delegation in the implementation of meeting of consultancyin the context of MAP.

(2) Special Team as intended in paragraph (1) shall consist of representative of the

Directorate of Tax Regulations II, the Directorate of Audit and Collection, andaudit implementation unit relating to correction of Transfer Pricing to bediscussed in the implementation of meeting of consultancy in the context of MAP.

(3) Special Team as intended in paragraph (1) can ask for data, information or necessary documents in connection with correction of Transfer Pricing toIndonesian Resident Taxpayer relating to request for implementing MAP.

(4) In the event that Indonesian Resident Taxpayer fulfills no request for data,information or documents entirely as intended in paragraph (3), the DirectorGeneral of Taxation can stop the implementation of MAP.

Article 25

The Director General of Taxation shall return Taxpayer ’s documents delivered in thecontext of implementation of MAP in the event that:

a. implementation of MAP is cancelled or ceased; or

b. Mutual Agreement has been reached with Partner Country of P3B.

Article 26



This Regulation of the Director General of Taxation shall come into effect as from thedate of stipulation.

Stipulated in Jakartaon November 3, 2010

The Director General,

signed

Mochamad TjiptardjoCivil Service Reg. No. (NIP) 195104281975121002

--------------------

Note

Attachment IREGULATION OF THE DIRECTOR GENERAL OFTAXATIONNUMBER PER-48 /PJ/2010REGARDING GUIDELINES FORIMPLEMENTATION OF MUTUAL AGREEMENTPROCEDURE BASED ON DOUBLE TAXATION AVOIDANCE AGREEMENT

PROCEDURE FOR FILING AND IMPLEMENTATION OF MAP FROM INDONESIANRESIDENT TAXPAYER OR INDONESIAN NATIONAL BECOMING RESIDENT

TAXPAYER OF PARTNER COUNTRY OF P3B

Taxpayer shall file MAP Application in writing that is enclosed by support documentscompletely to:

a. Tax Service Office where the Taxpayer is registered for Indonesian ResidentTaxpayer.

b. The Directorate of Taxation Regulations II for Indonesian National alreadybecoming Resident Taxpayer of Partner Country of P3B in respect of theprovisions on non-discrimination in the applicable P3B.

A. Tax Service Office of place of Registration of Taxpayer

1. Officer of TPT shall receive application for implementing MAP from

Indonesian Resident Taxpayer, then shall print out Proof of LetterReceipt (BPS) and Document Flow Supervision Sheet (LPAD). BPS willbe submitted to Taxpayer whereas LPAD will be united to applicationalong with its completeness. Then he shall forward the application alongwith its completeness to Account Representative (AR).

2. AR shall perform:

a. examination on the completeness of application for implementingMAP from Taxpayer and shall complete the related tax



documents available in administration of KPP;

notes:

In the event that MAP request delivered is incomplete, AR shallgive Taxpayer notification within a maximum period of 15 (fifteen)calendar days as from MAP request is received, that declares thatMAP request is incomplete and shall ask for Taxpayer tocomplete incomplete items.

b. drawing up covering letter to the Directorate of TaxationRegulations II,

then shall forward it to the Head of Supervision and Consultancy Section.

3. The Head of Supervision and Consultancy Section shall examine thecompleteness of Taxpayer ’s application and shall initial covering letter then forward it to the Head of Office.

4. The Head of Tax Service Office shall assess and sign covering letter tothe Directorate of Taxation Regulations II.

5. Executor of Supervision and Consultancy Section shall administer anddeliver covering letter along with Taxpayer ’s application and itscompleteness to the Directorate of Tax Regulation II within a maximumperiod of 30 (thirty) calendar days as from request is received completelythrough General Affairs Division (SOP for Documents Delivery at KPP).

B. The Directorate of Taxation Regulations II

1. The Director of Taxation Regulations II shall receive MAP Applicationfrom:

a. Indonesian Resident Taxpayer through Tax Service Office; or

b. Indonesian National becoming Resident Taxpayer of PartnerCountry of P3B,

then shall assign the Head of Sub-directorate of International Taxation Agreement and Cooperation to process the application.

2. The Head of Sub-directorate of International Taxation Agreement andCooperation shall assign the Head of Section of Sub-directorate of International Taxation Agreement and Cooperation to consider Taxpayer ’s application.

3. The Head of Section of Sub-directorate of International Taxation Agreement and Cooperation shall assign executor to examine and drawup concept /draft of:

a) MAP request to authorized official in Partner Country of P3B inthe event that MAP application can be processed further to beconsulted authorized official in Partner Country of P3B;

b) request for explanation to Taxpayer;



remain based on this Regulation of the Director General of Taxation.

Attachment IIREGULATION OF THE DIRECTOR GENERAL OFTAXATIONNUMBER PER-48 /PJ/2010REGARDING GUIDELINES FORIMPLEMENTATION OF MUTUAL AGREEMENTPROCEDURE BASED ON DOUBLE TAXATION AVOIDANCE AGREEMENT

PROCEDURE FOR HANDLING MAP REQUEST FROM PARTNER COUNTRY OFP3B

1. The Director of Taxation Regulations II shall receive and examine MAP requestfrom Partner Country of P3B then assign the Head of Sub-directorate of International Taxation Agreement and Cooperation to process the application.

2. The Head of Sub-directorate of International Taxation Agreement andCooperation shall assign the Head of Section of Sub-directorate of InternationalTaxation Agreement and Cooperation to consider Taxpayer ’s application.

3. The Head of Section of Sub-directorate of International Taxation Agreement andCooperation shall assign executor to examine and draw up concept/draft of:

a. notification on MAP request to the Head of Tax Service Office of place of Taxpayer and explanation request;

b. notification on MAP request to Taxpayer and explanation request throughKPP, in the event that MAP request is caused by withholding/collectionby Taxpayer; and

c. Mutual Agreement (MAP) in the event of reaching agreement; or

d. letter of rejection or of cessation of implementation of MAP in the eventthat MAP request cannot be processed further.

4. Executor of Sub-di rectorate of International Taxation Agreement andCooperation shall draw up concept of notification on MAP request, explanationrequest, draft Mutual Agreement or concept of letter of rejection or of cessation

of implementation of MAP then shall forward them to the Head of Section of Sub-directorate of International Taxation Agreement and Cooperation.

5. The Head of Section of Sub-directorate of International Taxation Agreement andCooperation shall examine and initial notification on MAP request, explanationrequest, Mutual Agreement or concept of letter of rejection or of cessation of implementation of MAP then shall forward them to the Head of Sub-directorate of International Taxation Agreement and Cooperation.

6. The Head of Sub-directorate of International Taxation Agreement and



Cooperation shall examine and initial notification on MAP request, explanationrequest, Mutual Agreement or concept of letter of rejection or of cessation of implementation of MAP then shall forward them to the Director of TaxRegulations II.

7. The Director of Taxation Regulations II shall assess and sign notification on MAPrequest, explanation request, Mutual Agreement or concept of letter of rejectionor of cessation of implementation of MAP.

8. Executor of Sub-di rectorate of International Taxation Agreement andCooperation shall administer and deliver:

a. notification on MAP request to the Head of Tax Service Office whereTaxpayer is registered or Taxpayer in the event that MAP request iscaused by withholding/collection by Taxpayer;

b. explanation request;

c. Mutual Agreement (MAP) to Partner Country of P3B with a copy

addressed to KPP where Taxpayer is registered; or

d. letter of rejection or of cessation of implementation of MAP to PartnerCountry of P3B with a copy addressed to KPP where Taxpayer isregistered,

through General Affairs Division (SOP Procedure for Documents Delivery at theHead Office)

9. The process is finished.

Notes:

The technical provisions in the context of settling MAP application shall remainbased on this Regulation of the Director General of Taxation.

Attachment IIIREGULATION OF THE DIRECTOR GENERAL OFTAXATIONNUMBER PER-48 /PJ/2010REGARDING GUIDELINES FORIMPLEMENTATION OF MUTUAL AGREEMENTPROCEDURE BASED ON DOUBLE TAXATION

AVOIDANCE AGREEMENT

PROCEDURE FOR IMPLEMENTATION OF MAP UPON THE INITIATIVE OF THEDIRECTOR GENERAL OF TAXATION

1. The Director General of Taxation shall assign the Director of TaxationRegulations II to file MAP request without being based on request from residentTaxpayer or from Partner Country of P3B.

2. The Director of Taxation Regulations II shall assign the Head of Sub-directorate



of International Taxation Agreement and Cooperation to file MAP request.

3. The Head of Sub-directorate of International Taxation Agreement andCooperation shall assign the Head of Section of Sub-directorate of InternationalTaxation Agreement and Cooperation to file MAP request.

4. The Head of Section of Sub-directorate of International Taxation Agreement andCooperation shall assign executor to examine and draw up concept /draft of:

a. MAP request to Partner Country of P3B;

b. request for documents and/or additional information relating to MAP fromresident Taxpayer or from KPP where the resident Taxpayer isregistered;

c. Mutual Agreement (MAP) in the event of reaching agreement; or

d. letter of cessation of implementation of MAP in the event that MAP isceased.

5. Executor of Sub-directorate of International Taxation Agreement andCooperation shall draw up concept of MAP request to Partner Country of P3B,request for documents and/or for additional information, draft Mutual Agreementor concept of letter of cessation of implementation of MAP then shall forwardthem to the Head of Section of Sub-directorate of International Taxation Agreement and Cooperation.

6. The Head of Section of Sub-directorate of International Taxation Agreement andCooperation shall examine and initial MAP request to Partner Country of P3B,request for documents and/or for additional information, Mutual Agreement or letter of cessation of implementation of MAP then shall forward them to the Headof Sub-directorate of International Taxation Agreement and Cooperation.

7. The Head of Sub-directorate of International Taxation Agreement andCooperation shall examine and initial MAP request to Partner Country of P3B,request for documents and/or for additional information, Mutual Agreement or letter of cessation of implementation of MAP then shall forward them to theDirector of Tax Regulations II.

8. The Director of Tax Regulations II shall assess and sign MAP request to PartnerCountry of P3B, request for documents and/or for additional information, Mutual Agreement or letter of cessation of implementation of MAP.

9. Executor of Sub-di rectorate of International Taxation Agreement andCooperation shall administer and deliver:

a. MAP request to Partner Country of P3B;

b. request for document and/or for additional information;

c. Mutual Agreement (MAP) to Taxpayer with a copy addressed to KPPwhere Taxpayer is registered; or

d. notification on cessation of MAP to Taxpayer,



through General Affairs Division (SOP Procedure for Documents Delivery at theHead Office).

10. The process is finished.

Notes:

The technical provisions in the context of settling MAP application shall remainbased on this Regulation of the Director General of Taxation.

Source: LOOSE LEAF REGULATION OF THE DIRECTOR GENERAL OFTAXATION YEAR 2010