• Indonesian

Indonesia Transfer Pricing: Inter-Company Transactions

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Transfer pricing is closely related to inter-company transactions that know no borders. In recent years, inter-company transactions have increased rapidly and now becoming more complex than ever.

Transfer Pricing in Indonesia in A Nutshell

What is Transfer Pricing?

Transfer pricing in Indonesia is a method that sets the price for transaction and transfer between related parties, which can be between a company and a company or a company and an individual. The arm’s length principle must be implemented as the standard of transfer pricing method.

The Documentation

Indonesia is committed to implementing the Action Plan 13, which is part of the Base Erosion and Profit Shifting (BEPS) Action Plans. In accordance with PMK-2132016 issued by the Minister of Finance of Indonesia, every affiliated transaction, both local and international, is required to provide documentation known as TP Doc.

It is mandatory for taxpayers to maintain 3-tier documentation, namely Master File, Local File (both must be made available within 4 months after fiscal year end) and Country-by-Country Report (CbCR). All of them have to be submitted in Bahasa Indonesia.

Taxpayers are also required to prepare a ‘Statement Letter’ that is to be signed by the person in charge of preparing the Transfer Pricing Documentation to declare when the Transfer Pricing Reports are available. Statement Letter is not required to be filed with the tax return, but should be attached to Master File and Local File for submission to Tax Authorities on request.

In general, transactions that satisfy any of the following criteria are required to prepare the TP Doc:

TP Documentation Icon
  • Gross Revenue (Revenue from main business activities before deducting sales discounts, etc.) in preceding year: exceeding IDR 50 billion
  • Services, Royalties Interest or other transactions in preceding year: exceeding IDR 5 billion
  • Tangible goods transactions in preceding year: exceeding IDR 20 billion
  • Related party transactions with affiliated entity located in a jurisdiction with tax rate lower than Indonesia (tax rate in USA is now lower than Indonesia – no threshold applicable now): no threshold
  • Taxpayers that qualify as a Parent Entity of a Business Group (Parent entity is defined as the Entity directly or indirectly controlling the Business Group and is required to prepare consolidated financial statements under Indonesian Financial Accounting Standards): consolidated gross revenue of at least IDR 11 trillion


Failure to be in compliance with transfer pricing policies and procedures in Indonesia as well as providing the required documentation may result in costly transfer pricing audits, let alone significant amount of additional tax liabilities and penalties.


Tax Return Compliance

Taxpayers are required to submit summary (ikhtisar) in the prescribed form along with the Annual Corporate Income Tax Return:

  • Whether the Master File and Local File contain the required information as per the regulations; and
  • Date on which the Master File and Local File are available (as declared on Statement Letter).


The above is in addition to the Special Attachment Forms (Forms 3A/3A-1 and Forms 3B/3B-1) filed along with Annual Corporate Income Tax Return.

Note that PMK-2132016 does not replace the current Transfer Pricing regulation issued by the Directorate General of Taxation under Regulation No. PER-43/PJ/2010 (amended by Regulation No. PER-32/PJ/2011). Therefore, documentation requirements under Regulation No. PER-32/PJ/2011 may also need to be complied with at the same time as those regulated in PMK-2132016.


Country-by-Country Report

In addition to the above, it is also important to familiarise yourself with the preparation of country-by-country report.

Transfer Pricing 1

Primary filing requirements for country-by-country report

  • Parent Entity of the Business Group: tax resident of Indonesia
  • Consolidated gross revenue: at least IDR 11 trillion
  • Transactions with foreign subsidiaries: yes


Transfer Pricing 2
Preparation timeline for country-by-country report
12 months after the end of tax year (Tax year 2016 is the first year of coverage)


Transfer Pricing 3

Secondary filing requirements for country-by-country report

  • Parent Entity of the Business Group: foreign tax resident
  • Any one of these is satisfied: Country of Parent Entity does not require submission of CbCR; or Country of Parent Entity does not have an agreement with the Government of Indonesia on exchange of information (‘EOI’); or Country of Parent Entity has an EOI but the CbCR cannot be obtained by the Government of Indonesia.

Other Noteworthy Points

related party - icon

Definition of Related Party

As per Article 18(4) of the Income Tax Law, the definition of related parties is as follows:

  • A taxpayer owns directly or indirectly at least 25% of the equity of the other taxpayer, or two or more taxpayers;
  • A taxpayer ‘controls‘ another taxpayer or two or more taxpayers, directly or indirectly (special relationship may result from participation in management or technology even if there is no ownership); or
  • A family relationship exists through either blood or marriage, within one degree of direct or indirect lineage
    a. relationship by blood in one degree of direct lineage horizontally: relatives
    b. relationship by marriage in one degree of direct lineage vertically: parents-in-law, stepson or stepdaughter
    c. relationship by marriage in one degree of direct lineage horizontally: relatives-in-law


local file - icon

Broad contents of Local File

  • Details about local entity such as organization structure
  • Description of the entity’s business
  • Details of related party transactions – name of related party, amount, description of relationship between local entity and transacting entity
  • Functional, asset and risk profile of the related party transaction
  • Comparability analysis and financial information of the local entity


master file - icon

Broad contents of Master File

  • Ownership structure and jurisdiction of Group Companies
  • Business activities of each entity of the Group
  • Description of supply chain for the largest products
  • Details of intangibles of the Group
  • Group’s inter-company financial activities
  • Consolidated financial statement of the Group


Transfer Pricing with Cekindo

Cekindo’s transfer pricing services in Indonesia are designed to comply with Indonesian statutory requirements and international practice while at the same time being tailored to your business needs.


Nipun Arora

Nipun Arora
Director, Transfer Pricing Practice

Nipun is a Chartered Accountant from India and leads the Transfer Pricing practice at In.Corp Global Pte Ltd in Singapore. He has worked with Big Four accounting firms throughout his career and has accumulated more than 13 years of experience in Transfer Pricing (TP) providing advisory services to medium and large-sized multinational corporations in the Automotive, FMCG, Retail, Telecom and Luxury goods sector. Nipun has been involved in several litigation matters involving complex TP issues and has assisted Senior Counsels in India up to the High Court stage. He has also been involved in assisting clients in preparing year end Transfer Pricing documentations ensuring that the Transfer Pricing policies are in agreement with the arm’s length principles and the BEPS Action Plans. He has also worked on several large TP Due Diligence mandates.

Contact Our Consultants

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    Selected Testimonials

    • logo-PT-Asia-Victory

      Prior to choosing Cekindo as our business partner in Indonesia, we interviewed and compared several companies. Finally, we chose to cooperate with Cekindo because of its professionalism and quality. Cekindo has assisted us in many ways, from company certification application to KITAS application and financial statement compliance to the fulfillment of other tax obligations in Indonesia. We appreciate the team’s fast response and professionalism in preparing the financial statements, among others.

      Doris Chen
      PT. Asia Victory and PT. Bigger One
    • logo Toaster

      When I joined Toaster, it was already working with Cekindo. But it’s quick to see why Toaster chose Cekindo. Cekindo has been very helpful throughout. Toaster Headquarters is based in London. Indonesian tax laws are not our specialty. Cekindo’s team has helped us to understand Indonesian tax. They are very knowledgeable and dependable, and therefore a huge asset to our company.

      Tsui-Sie Wong
    • logo Ohmnia

      As a new business in Indonesia, we started consulting with multiple law firms but quickly narrowed down to only Cekindo. Cekindo was recommended as one of the top firms by multiple sources in the business community. The staff at Cekindo was very responsive to our needs as a new business. The team provided consultancy and assisted our startup firm with initial business setup, licenses and permits, HR/recruitment and market research. One year since our establishment, we still consider Cekindo as our partner.

      PT Ohmnia Tenaga Surya
    • Jan Pilar - Hydropol

      When we intended to enter the Indonesian market back in 2013/14, Cekindo helped us to understand the possibilites and options for business presence in Indonesia through legal advice & also advisory on how to arrange for ownership. Furthermore, Cekindo also provides us with a range of fully professional and reliable accounting & tax services for our representative office in Indonesia. In the world of digital & virtual economy like today, it is an essential prerequisite to have the most reliable business partner like Cekindo.

      Jan Pilař
    • Sagar Datar - Bristlecone

      A huge gratitude to Cekindo, particularly its visa team, for handling our visa cases. During our visa applications, Cekindo was extremely helpful not only in facilitating all of our visa requirements but also in clarifying our queries/doubts. I would like to take this opportunity to acknowledge and appreciate the good work of Cekindo’s visa team.

      Sagar Datar
    • Matthias Coessens - Empyrean

      When I was looking for a reliable partner who could help with company registration, payroll, taxes and working permit in Indonesia, Cekindo’s domain knowledge and clear communication astonished. Firstly, we decided to pursue cooperation with Cekindo in terms of company registration, but they also assisted me in obtaining the necessary working permits and visas (KITAS), and we use their payroll and tax reporting services until now.

      Matthias Coessens
      Product Director at Empyrean Solutions Apac
    • Ivana Bartonkova

      Cekindo handled business visa for our new colleague promptly and made the start of our company in Vietnam easier and faster. I particularly enjoyed communication with the consultant, who advised the best solution for us and was all the time available to answer any questions. She made sure that all the documents were collected and prepared on time and we got great support during the whole process. Thank you Cekindo and I hope to cooperate again in the near future!

      Ivana Bartonkova
      Marketing and HR director of Port Cities Vietnam
    • Phyto CZ Sro

      Cekindo assisted us with a selection of our local distributor in Indonesia and organised several meeting in Jakarta. Their assistance enabled us to meet our potential local partners and choose the best distributor conveniently. The decision to cooperate with Cekindo was based on a recommendation from our prominent partner in Bali and we cannot be more grateful. Cekindo’s systematic work, active communication, thoroughness and professionalism was exceptional.

      Ing. Václav Tomek
      Phyto CZ Sro
    • Vivek Singh Rathaur

      Cekindo initially helped us with setting up our business structure in Indonesia and getting us all due licenses and approvals. Currently, Cekindo is associated with us as our business partner in Indonesia by providing a face to our name and handling various business activities on our behalf. Without their help, we would be lost in keeping up with regulatory requirements and being a compliant company in Indonesia.

      Vivek S.Rathaur
      Vega Industries
    • akvo - cekindo

      Thanks to Cekindo and its one-stop market entry solutions, we could start exploring the Indonesian market. Cekindo’s broad portfolio of services included a formal process of our representative office registration, consultations regarding proper legal set-up and even working permit and visa applications. Cekindo’s extensive knowledge of the latest developments and legal requirements allowed us to focus on more operational matters and to build a local team in Indonesia.

      Peter van der Linde
      Co-founder / Director strategy & solutions, Akvo Pte Ltd