Transfer Pricing DocumentationIndonesia
New Transfer Pricing Documentation Regulation in Indonesia PMK 213/PMK.03/2016
The Minister of Finance of the Republic of Indonesia had issued the new regulation concerning transfer pricing documentation requirements on PMK No. 213/PMK.03/2016 regarding the type of additional mandatory information to be managed and retained by the taxpayers who conduct transactions with related parties. The new rule became effective on December 30, 2016 and is applicable for from the fiscal year 2016 onwards. The regulation implements new transfer pricing documentation guidelines developed by the Organisation for Economic Co-operation and Development (OECD) in the course of the Base Erosion Profit Shifting 13 (BEPS 13) project.
According to the new regulation, the taxpayers are now required 3 (three) tier of transfer pricing documentation as follows:
- Master file
- Local file
- Country-by-Country Report
What’s the at least information contain of these file or report?
1. Master File
The Master file must contain at least the business group information as follows:
• Business activities performed by business group
• Details of the intangible assets owned by the business group
• Financial and financing activities in the business group
• Consolidated financial statements of the parent entity and tax information regarding related party transactions
2. Local File
The local file must contain at least the business group information as follows:
• Information on related party transactions and independent transactions conducted
• Application of the arm’s length principle
• Financial information from the taxpayer
• Non-financial events/occurrences/facts influencing the formation of price or profit level
3. Country-by-Country Report
The Country-by-Country Report must contain at least the business group information as follows:
• Income allocation, taxes paid, and country by country or jurisdiction business activity from all the business group members both domestic and overseas that include the country’s name or jurisdiction, gross revenue, profit (loss) before tax, income tax that has been self-deducted/collected/paid, income tax payable, capital, retained earnings, permanent employee headcount, and tangible assets other than cash and cash equivalent; and
• List of the business group members and country-by-country or jurisdiction of main business activity.
What are provisions the language and currency in the transfer pricing documentation?
The aforementioned documents use the Indonesian language and with the situation that the taxpayer has received permission from the Minister of Finance of the Republic of Indonesia to maintain the books in foreign languages and currencies other than the Rupiah, limitation on the value of money in Rupiah currency equivalent to the value of currencies other than Rupiah based on the exchange rate set by Minister of Finance of the Republic of Indonesia for tax calculation at the end of the Taxable Year.