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Related party in Singapore as a lower tax country

Induk kami di Singapura. Itu termasuk negara tarif lebih rendah?

The situation

The trigger compares the related party's tax rate with Indonesia's 22 percent corporate rate. Singapore's headline rate is lower.

The law

  • PMK 172/2023 on the arm's length principle: Master file and local file if prior year revenue is over IDR 50 billion, tangible related party deals over IDR 20 billion, other related party deals over IDR 5 billion, or a related party in a lower tax country

What it means for you

If a related party is in a country with a lower rate, documentation is required at any transaction value. Check the actual rate rules in the regulation. Example: any deal with a Singapore parent can trigger documentation.

What to do

  1. List related parties by country.
  2. Compare their tax rates with 22 percent.
  3. Prepare documentation if lower.
  4. Keep evidence of the rate test.

Low value deals do not escape this trigger.

We can do this for youTransfer pricing documentation: master file, local file, summary with the annual return and CbCR: IDR 45.000.000

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