MoFR 172/2023: The New Indonesian Transfer Pricing Guidelines

TaxPrime Newsletter: Minister of Finance Regulation Number 172 of 2023

Indonesia’s transfer pricing landscape is poised for a transformation with the introduction of the Minister of Finance Regulation Number 172 of 2023 (MoFR-172 or PMK-172). This pivotal regulation, centered on the Implementation of the Arm’s Length Principle (“Prinsip Kewajaran dan Kelaziman Usaha/PKKU”), marks a strategic response to recent amendments in the Income Tax Law and the General Provisions and Procedures of Taxation Law. These amendments stem from the harmonization of Tax Regulations Law and its implementing Government Regulations, GR-50 and GR-55 of 2022. MoFR-172 introduces changes in how transfer pricing, Mutual Agreement Procedure (MAP), and Advance Pricing Agreement (APA) are conceptualized and implemented. It signifies a progressive step towards refining tax compliance to enhance fairness in business practices, especially regarding transfer pricing practices and impacts.