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Domestic Taxpayers and Indonesian Citizens: Different Reasons and Ways to Apply for MAP According to PMK 172/2023

September 10, 2026

Multinational corporations increasingly face the risk of double taxation on their cross-border transactions because the tax authorities in the two countries interpret the same transaction differently, especially transactions between affiliated companies that are subject to transfer pricing rules. These issues are difficult to resolve—lodging objections or appeals in one country seldom works, because domestic tax court decisions are not binding on the tax authorities of other countries. This is where the Mutual Agreement Procedure (“MAP”) becomes important. The mechanism, which is set out in all double taxation agreements (“DTAs”), allows the tax authorities from the two countries in question to negotiate directly to eliminate double taxation and restore legal certainty for affected taxpayers.

Even with a MAP in place, there is still room for variation in interpretation. To address this, and to further refine the country’s transfer pricing framework, the Indonesian Ministry of Finance issued Minister of Finance regulation PMK 172/2023 in December of 2023. The regulation provides further guidance on a number of transfer pricing topics, including on the MAP mechanism.

Per this regulation, an application to initiate a MAP can be submitted by four parties, two of which are most commonly used domestic taxpayers and Indonesian citizens but are regulated differently. It is important to understand these differences, since the status of the applicant has implications for which disputes can be submitted as well as the submission path, and a mistake in determining which option fits risks rejection of the application.

Under Article 1 of PMK 172/2023, a “domestic taxpayer” refers to an individual or entity that has tax rights and obligations in Indonesia, while an “Indonesian citizen” refers to an Indonesian citizen who has the status of a domestic taxpayer in the DTA partner country.

The grounds for submitting a MAP application also differ. Article 41, paragraphs (5) and (6) give domestic taxpayers broad scope for protesting: from transfer price corrections, double taxes due to partner country authorities, withholding income tax not in accordance with the DTA, to disputes over the status of tax subjects and discrimination, and even actions by the Indonesian Director General of Taxes (“DGT”). Indonesian citizens, on the other hand, are allowed only one reason per Article 41 paragraph (7), namely discriminatory treatment in a partner country that is contrary to the DTA non-discrimination clause.

There are also two distinct submission procedures:

• Domestic Taxpayers apply for a MAP through the Tax Service Office where they are registered using the format in Attachment I.1 of PMK 172/2023.
• Indonesian citizens submit a MAP application to the DGT through the Directorate of International Taxation instead of the Tax Service Office using the format in Special Appendix I.2.

The importance of understanding the differences when applying for a MAP is especially relevant for multinational groups with Indonesian employees who are stationed abroad and have domestic taxpayer status in DTA partner countries, as well as Indonesian entities that face cross-border transfer price corrections.

The Andersen in Indonesia team can help businesses with ensuring that applicants are using the correct category for their dispute, preparing supporting documents, and assisting with the MAP submission process in accordance with PMK 172/2023. Contact our team for a consultation before your MAP application deadline expires.

By Olina Rizki Arizal – Senior Partner