Overview of Transfer Pricing in Indonesia
Since transfer pricing (TP) can be used to transfer assets and income between jurisdictions, all with favourable tax rates, tax authorities have now considered it a significant issue. With that being said, Indonesian tax authorities attempt to tackle the challenge by implementing detailed TP regulations and complex documentation requirements, among others.
Related parties that fail to comply with the TP regulations and cannot satisfy the Indonesian documentation requirements can suffer from severe penalties. Nevertheless, when related parties can understand that TP is a continuous process, they will eventually be able to minimise risks related to taxes in Indonesia.
Cekindo’s Transfer Pricing Advisory Services in Indonesia
Your business model is the key to determine your TP setting. Our TP advisory services are marked by the objective to support your business needs, while at the same time are designed to comply with the statutory requirements in Indonesia and international practices.
Based on our extensive experience in transfer pricing, our team can provide you with the following services:
- Determination of arm’s length price range in respect of the proposed related party transactions such as cost plus mark-up analysis and arm’s length net margin range.
- Review of existing value chain to identify any areas of risk and opportunities to improve existing TP policies.
- Review of inter-company agreements to ensure that the same is compliant from TP perspective.
- Royalty benchmarking to determine the arm’s length royalty payout for use of IP keeping in view the functional profile of the transacting entities.
- Management cross-charge documentation, including benefit analysis and methodology for arm’ length cross-charge.
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