PKKU Provisions Reinforced, Directorate General Of Taxes Encourages Legal Certainty

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JAKARTA - The government has issued Minister of Finance Regulation (PMK) Number 172 of 2023 concerning the Implementation of the Principles of JUSTification and Business Acquisition (PKKU) in Transactions Influenced by Special Relations.

PMK is a derivative regulation of Government Regulation (PP) Number 50 of 2022 concerning Procedures for the Implementation of Tax Obligations and Government Regulation (PP) Number 55 of 2022 concerning Adjustment of Regulations in the Tax Field of Income.

Director of Counseling, Services, and Public Relations of the Directorate General of Taxes (DJP) Dwi Astuti said, PMK PKK is a codification of the three previous provisions. Among them, first, PMK Number 213 / PMK.03 / 2016 concerning Types of Documents and/or Additional Information that Require Taxes to Transaction with Parties With Special Relations, and Management Procedures.

Second, PMK Number 49/PMK.03/2019 concerning Procedures for Joint Approval Procedures. Third, PMK Number 22/PMK.03/2020 concerning Procedures for Implementing Transfer Price Agreements (Advance Pricing Agreement).

"The codification of the rules is carried out as an effort to increase effectiveness and efficiency in the application of regulations related to PKKU," said Dwi in his written statement, quoted on Sunday, January 14, 2024.

Dwi said that the issuance of PMK is expected to provide a sense of justice, legal certainty, as well as facilitate the implementation of rights and obligations by taxpayers.

In addition, Dwi also said that the issuance of PMK was also motivated by the development of the business world and the increase in the volume of taxpayer transactions affected by special relations.

In accordance with the mandate of Article 37 and Article 47 of PP Number 55 of 2022, Article 11 paragraph (3) of PP Number 50 of 2022, as well as Article 44E paragraph (2) of General Provisions and Tax Procedures (KUP) for the issuance of PMK include several arrangements related to taxpayer transactions affected by special relations.

The arrangements in question are the application of the principles of civility and business fairness (PKKU), agreement on price transfer (advance pricing agreement), types of documents and/or additional information in transactions influenced by special relationships, as well as the implementation of joint agreement procedures.

"In the latest regulation, provisions are also set regarding the absence of differences in the PKKU's nickname for domestic Transfer Pricing (TP) with a TP cross border. In addition, it is also regulated regarding Adjustment of Relatedness (corresponding adjustment) for domestic TP," he concluded.