Indonesia: FAQs on transfer pricing

Indonesia: FAQs on transfer pricing

Transfer pricing has been at the top of the agenda of both taxpayers and the Indonesian tax authorities ever since the first Indonesian transfer pricing regulations were issued in 2010.

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Indonesia’s transfer pricing regulations focus on determining the price in a transaction between parties having a “special relationship”—defined to include a capital participation of 25% or more, control through management or technology, or a “family relationship.”

Documentation, country-by-country reporting

Under the transfer pricing rules, Indonesian taxpayers are required to disclose additional details of their related-party transactions in their annual tax returns and to declare that transfer pricing documentation is available. 

Also, the Directorate General of Tax has informally expressed an intention to adopt a country-by-country reporting requirement that reflects the base erosion and profit shifting (BEPS) project recommendations of the OECD. However, it is uncertain at this time whether country-by-country reporting will be formally implemented in Indonesia.

 

Read a 2016 report [PDF 5.29 MB] prepared by the KPMG member firm in Indonesia: Transfer Pricing: Frequently Asked Questions

 

The FAQs addressed in this report are:

  • What is transfer pricing?
  • What are “special relations”?
  • How to mirror arm’s length price methodologies
  • What are the obligations for Indonesian taxpayers?
  • Are there instances where no transfer pricing documentation is required?
  • Why does the transfer pricing need to be controlled and monitored?
  • How do the Indonesian Tax Authorities detect transfer pricing policies?
  • Alternative dispute resolution options

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