After the Harmonization of Tax Law was issued in last 2021, finally the awaited implementing regulation regarding Transfer Pricing (“TP”) has been released by the Ministry of Finance (MoF) on last 29 December 2023. The taxpayer conducting the transactions influenced by special relationship starting from FY2024 should emphasize on some important transformations in this PMK-172 which impacts among others on some of below matters:

  1. The taxpayer needs to identify its transaction influenced by special relationship since the determination of this transaction in PMK-172 is not only comprised of related party transaction.
  2. The application of Arm’s Length Principle also has some additional criteria in term of the requirement of preliminary stage analysis to certain transactions, the geographical comparability, and the single-year comparable data for the benchmarking purpose.
  3. The secondary adjustment and VAT implication during the tax audit are also modified in this PMK-172 that need extra attention.

This new regulation revokes several MoF Regulations issued in 2016-2020 regarding TP Documentation, Mutual Agreement Procedure (“MAP”), and Advance Pricing Agreement (“APA”). It seems PMK-172 is structured to be a “one-stop guideline”.