Transfer pricing documentation: master file, local file, summary with the annual return and CbCR
We test whether you must prepare a master file and local file, document your related party deals, benchmark prices, prepare the summary for the annual return, and keep the file ready for a DJP request.
IDR 45.000.000Yearly
For: Companies with related party transactions, mainly PT PMA, group subsidiaries and companies trading with affiliates abroad.
What we need from you
Prior year gross revenue
IDR 50 billion test
Related party transaction values by type
IDR 20 billion goods, IDR 5 billion other
Group structure chart
Master file content
Intercompany agreements
Terms of each deal
Segmented profit and loss
Benchmarking
Related parties' tax rates
Lower tax country trigger
What we discuss
Did any threshold get crossed last year?
Triggers both files
Is any related party in a country with a lower tax rate?
Triggers documentation at any value
Is the group revenue above the CbCR threshold?
IDR 11 trillion local parent; foreign parent rules differ
Do you pay management fees or royalties?
High audit focus; need benefit evidence
What we file
Threshold test
Prior year revenue IDR 40,000,000,000 but intra group service fees IDR 6,000,000,000: over the IDR 5 billion other transactions limit, so documentation required
Prepare master file and local file in Indonesian
Summary attachment to annual return
What you get
Local file and master file
Summary for the return
Pricing policy note for next year
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 Source
- Art 18(3), Law 7/1983 on Income Tax (PPh Law), as last amended by Law 6/2023: The DJP may redetermine income and costs between related parties using the arm's length principle Source
- Art 28, Law 6/1983 on General Provisions and Tax Procedures (KUP Law), as last amended by Law 6/2023: Businesses and companies must keep books in Indonesia, in Indonesian and in rupiah unless permitted otherwise; small individuals may keep records instead Source
Questions people ask
- When TP documentation is required
- Related party in Singapore as a lower tax country
- Deadline to produce the local file
- Language of TP documents
- Management fees paid to head office
- TP summary in the annual return
- Country by country report for a local group
- Benchmarking with local comparables
- Advance pricing agreement option
- Transfer pricing adjustment treated as dividend
Contact us to book
Online payment in IDR is not open yet. Send us a message and an adviser for Indonesia confirms the scope and the fee before any work starts.