The Government Mandates the Timely Submission of Transfer Pricing Documentation by Taxpayers
Transfer Pricing Documentation, abbreviated as TP Doc, is a corporate policy used to determine the transfer price of various transactions conducted by a company, including goods, services, financial transactions, and intangible assets.
In Indonesia, this policy aligns with the Arm’s Length Principle (ALP), which stipulates that every transaction conducted by a taxpayer must adhere to principles of fairness and common business practice. To ensure compliance, the Ministry of Finance has issued Regulation Number 213/PMK.03/2016, outlining the types of documents and additional information that taxpayers engaged in transactions with related parties must maintain, along with the procedures for managing these records.
In recent updates, the government has mandated that taxpayers submit their transfer pricing documentation (TP Doc) within one month from the request made by the Directorate General of Taxes (DJP). Taxpayers are expected to meet this deadline, as they have already expressed their intent to provide the TP Doc during their annual tax return (SPT) filing.
Failure to meet this one-month deadline will be recorded by tax officials and may have implications for the taxpayer's supervision or examination processes.
The current regulations governing TP Doc are outlined in Minister of Finance Regulation (PMK) 213/106. TP Doc comprises a master file, a local file, and country-by-country reporting (CbCR). The master file and local file should be made available no later than four months after the end of the tax year, while CbCR should be available within a maximum period of 12 months after the end of the tax year.
Failure to submit the master file and local file within the prescribed timeframe will result in non-compliance. If the master file and local file are not submitted upon request by the DJP, the taxpayer will be considered to have failed in fulfilling their obligation to establish and maintain TP Doc.
If you are unsure about the latest updates or how to submit your TP document when filing your annual tax return (SPT), the services provided by Moores Rowland Indonesia can offer consultation and solutions to address your needs. For more information about our services, please contact us at contact-Jakarta@moores-rowland.com or contact-Bali@moores-rowland.com.
**By: Stefani W. Anggraeni — Marketing Communications & Social Media Specialist