Transfer pricing classification and preparation entities | Indonesian Tax Guide 2025 (43)
Indonesia
Transfer pricing documentation
2025-03-14 09:09:18
Page view：350
This issue's introduction
Special Tax Adjustment Policy
Transfer pricing classification and preparation entity
Transfer pricing documentation should be in Indonesian.
Where approval is obtained to use English, taxpayers may provide English documents and attach an Indonesian translation.
(1) The total operating income in the previous tax year exceeds IDR 50 billion:
(2) The transaction amount of tangible goods in the previous tax year exceeds IDR 20 billion:
(3) The transaction amount of services, intangible assets, interest or other transactions in the previous tax year exceeds IDR 5 billion;
(4) Related-party transactions with related parties located in a tax jurisdiction with a lower tax rate than Indonesia. The parent company of a business group that is a taxpayer and has a consolidated total revenue of IDR 11 trillion in the previous fiscal year must prepare a master file, a local file and a country-by-country report".
A parent company refers to an enterprise that directly or indirectly owns one or more constituent entities in a multinational group, is obliged to prepare consolidated financial statements in accordance with generally accepted accounting principles in the country of its location, and is not directly or indirectly owned by another constituent entity in the group or another constituent entity that is not obliged to prepare consolidated financial statements.
In the case where a foreign parent company designates another foreign constituent entity in the group to replace the parent company, the Indonesian company as a constituent entity of the group is not obliged to submit a country-by-country report as long as the following circumstances exist:
① The Indonesian company submits a report to the Tax Bureau regarding the entity being Notification of designation as a substitute entity for the parent company;
② The country or region where the designated substitute entity for the parent company is located requires submission of a country-by-country report, and the competent authority agreement is valid. The relevant Indonesian authorities may obtain the country-by-country report from the other contracting party to the tax treaty.
There are no special provisions for the local part of the group to submit a country-by-country report in other countries.
Agent filing does not apply to Indonesian taxpayers who are the parent companies of corporate groups. The Indonesian parent company must prepare and submit a country-by-country report in Indonesia, and cannot designate another entity in Indonesia or another country to fulfill the country-by-country reporting obligations.
The foreign ultimate parent company of the group may nominate another foreign entity to submit a country-by-country report as the agent of the foreign ultimate parent company.
The excitement continues in the next issue...