Examining the Deadline of TP Doc Availability in PMK 172/2023

The enactment of Minister of Finance (PMK) Regulation No. 172 of 2023 on the Application of Arm's Length Principles (PKKU) in Transactions Affected by Special Relationships has changed the provisions related to the obligation to provide Transfer Pricing Documentation (TP Doc).

This includes the deadline for providing TP Docs, which include Master File, Local File, and Country by Country Report (CbCR).

Indeed, not all provisions regarding time limits have changed. Some provisions are still the same. For example, the obligation to make a statement regarding the deadline for the availability of Master File and Local File regulated in this regulation is still the same as the old regulation, namely PMK Number 213 Year 2016. 

Both regulations require that the statement letter be signed by the party providing the documents.

Likewise, the provision regarding the deadline for the availability of Master File and Local File, as stated in Article 18 paragraph (3) of PMK 172 of 2023, remains the same as the previous regulation, which is no later than 4 months after the end of the tax year. 

Then, regarding the deadline for the availability of CbCR, it remains the same which is a maximum of 12 months after the end of the tax year. This is as stated in Article 18 paragraph (2) of PMK Number 172 of 2023. 

TP Doc for Audit

What is different from the previous provision is the time limit for submission in the context of compliance monitoring and audit, as stipulated in Article 34 paragraph (2) of PMK 172 Year 2023.

The provision states that the time limit provided to Taxpayers to submit Master File and Local File is a maximum of one month since the request for these documents is submitted by the Directorate General of Taxes (DGT).

The request for these documents is for audit purposes and in the context of compliance monitoring. 

Implications of lateness is Unregulated

Another thing that needs to be observed from PMK 172 Year 2023 is that it does not explicitly regulate the consequences that must be borne by taxpayers if they are late in fulfilling the availability of TP Doc.

This is contradictory since the TP Doc regulation stipulated in PMK 172 Year 2023 is made more detailed, especially related to the TP Doc request from the Tax Authority. 

This is different compared to the old provision. In PMK Number 213 Year 2016, Taxpayers who do not provide TP Docs within the stipulated period are deemed not to keep or not to organize TP Docs.

Likewise, if the TP Doc is available, but exceeds the stipulated period, the Taxpayer is deemed not to analyze the application of the arm's length principles. 

Another point to note is that while this provision takes effect from 2023, its implementation is applicable solely for the preparation of TP Docs for the tax year 2024 onward. (ASP/KEN)