This content is from: Indonesia

Indonesia: New transfer pricing requirements in Indonesia

Freddy KaryadiAnastasia Irawati

In an effort to limit tax avoidance and combat BEPS practices in Indonesia, the Indonesian government issued new transfer pricing regulations in Indonesia that intend to minimise the transfer pricing schemes conducted by multinational enterprises.

Regulation No. 213/PMK.03/2016 of the Ministry of Finance (PMK 213) details the type of documents and/or additional information that must be maintained by a taxpayer who conducts transactions with an affiliated party, as well as the maintenance procedures.

The requirement must be met by certain taxpayers who fulfil the following criteria:

  • A taxpayer who conducts an affiliated transaction with a gross revenue of more than IDR 50 billion ($3.8 million) in the previous fiscal year. This taxpayer should maintain the master document and the local document (to be further defined in the following paragraphs);
  • A taxpayer who conducts an affiliated transaction with a value of:

a) more than IDR 20 billion for tangible goods transaction; or

b) more than IDR 5 billion for providing services, interest payment, utilisation of intangible assets, or other kind of affiliated transactions in the previous fiscal year

This taxpayer should maintain the master document and the local document;

  • A taxpayer who conducts an affiliated transaction with an affiliated party who is located in a country with a lower income tax tariff than the income tax tariff imposed in Indonesia. This taxpayer should maintain the master document and the local document;
  • A taxpayer who is a parent entity of a group company that has a consolidated gross revenue of IDR 11 trillion. This taxpayer should maintain the master document, local document, and the country-by-country report; or
  • A taxpayer who is a subsidiary of a foreign group company where the country of origin of the parent company:

a) does not require a filing of a country-by-country report;

b) does not have an exchange of tax information agreement (TIEA) with the Indonesian government; or

c) has a TIEA with Indonesia, but the Indonesian government cannot obtain a country-by-country report from the jurisdiction. This taxpayer should maintain a country-by-country report only.

The PMK 213 requires a taxpayer who is subjected to this regulation to maintain a set of documents to be used as a base to implement the Principle of Fairness and Business Prevalence in Determining the Transfer Pricing (TP documents). The TP documents consist of the master document, local document and country-by-country report.

The master document should consist of information regarding the group company that includes, among others:

  • The structure and the ownership chart and the country of origin or jurisdiction of each member of the group company;
  • Business activities conducted by the group company;
  • Intangible assets of the group company;
  • Financial and financing activities of the group company; and
  • A consolidated financial statement of the parent company and the tax information related to affiliated transactions.

The local document should consist of information regarding the taxpayers that includes, among others:

  • The identity of the taxpayer and the business activities conducted;
  • Information regarding affiliated transactions and independent transactions of the taxpayers;
  • The implementation of the Principle of Fairness and Business Prevalence of the taxpayers;
  • Financial information of the taxpayers; and
  • Events/occurrences/non-financial facts of the taxpayers that influence the formation of the price or level of profits.

The country-by-country report should consist of the following information:

  • Allocation of income, paid taxes, and business activities of all members of the group entity, either onshore or offshore that must include, among other things:
    1. the country of origin;
    2. gross revenue;
    3. profit (loss) before taxes;
    4. income taxes paid;
    5. tax payable;
    6. capital;
    7. accumulation of retained earnings;
    8. total amount of permanent employees; and
    9. tangible assets equivalent to cash and excluding cash; and
  • A list of members of the group entity and the main business activities per country.

All of these documents must be made in Indonesian, except for a taxpayer who has obtained approval from the Minister of Finance to prepare bookkeeping in a foreign language and in other currencies other than Rupiah. For this kind of taxpayer, the report can be made in accordance with the foreign language stipulated in the approval and accompanied by an Indonesian translation.

The completed documentation for the master document and the local document should be available no later than four months after the end of the fiscal year based on the actual data and information available during the occurrence of the affiliated transaction. As for the country-by-country report, it should be prepared based on the data and information available at the end of the fiscal year. The country-by-country report should be available within 12 months of the end of the fiscal year and should be submitted as an appendix of the annual income tax return in the following fiscal year.

Freddy Karyadi ( and Anastasia Irawati (
Ali Budiardjo, Nugroho, Reksodiputro, Law Offices
Tel: +62 21 250 5125

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