Transfer Pricing Service
In taxation and accounting, transfer pricing refers to the rules and methods for pricing transactions between enterprises under common ownership or control. Because of the potential for cross-border controlled transactions to distort taxable income, tax authorities in many countries can adjust goods or intragroup transfer prices that differ from what would have been charged by unrelated enterprises dealing at arm’s length (the arm’s-length principle).
Transfer pricing affects the amounts paid as corporate tax – the current economic conditions and the stringent need for resources at the state budget have determined the tax authorities to be more concerned about the topic of transfer pricing. This is also strengthened by the work of OECD regarding the base erosion and profit shifting (referred to as BEPS). Transfer pricing is not an exact science, therefore it is much easier for tax authorities to impose transfer pricing adjustment and recalculation of taxes to be paid from the budget. This is why companies which are part of a group must have strong arguments (organized in the transfer prices file) that transfer og goods or intra-group transaction prices are arm’s length and not used for an “artificial” increase of spendings or “artificial” cut of incomes.
Indonesia has launched new transfer pricing reporting compliance requirements through the Minister of Finance is Regulation No. 213/PMK.03/2016 which were issued at the end of 2016, and put into effect reporting and documentation recommendations from the OECD’s base erosion and profit shifting (BEPS) project.
The guidance issued by the Minister of Finance is Regulation No. 213/PMK.03/2016, and it requires the preparation of three documents regarding related-party transactions:
- The Master file, containing general information about the taxpayer group
- The Local file, containing specific information on operations in Indonesia
- The country-by-country (CbC) reporting file, containing detailed financial and other information on each of the members of the group
The Master file and the Local file must be available, upon request, four months after the fiscal year-end, and must be available in either the Bahasa Indonesian language or English language (for taxpayers having approval to maintain their bookkeeping in the English language, it must be accompanied by a Bahasa Indonesian translation). The CbC report submission is due within one year after.
Taxbind will assist you in transfer pricing services regarding to comply with Minister of Finance Regulation No. 213/PMK.03/2016 in form of :
- Transfer Pricing Documentation
- Transfer Pricing Planning & Advisory
- Transfer Pricing Diagnostic Review
- Transfer Pricing Benchmark Analysis & Restructuring
- Transfer Pricing Dispute Resolution
- Transfer Pricing Training