Transfer Pricing

Transfer Pricing is basically a company policy in determining the transfer price for a transaction. Transfer pricing can be divided into 2 (two) types based on the purpose, namely intra-company and inter-company transfer pricing. Intra-company transfer pricing is the transfer price used for transactions between divisions within a company. Meanwhile, inter-company transfer pricing is the transfer price used between two or more companies that have a special relationship. The two companies can be in one country (domestic transfer pricing) and can also be in different countries (international transfer pricing). Currently, the issue of transfer pricing has become a serious concern for tax authorities around the world. This is due to the many motives carried out by companies by using transfer pricing loopholes to move income or assets from one jurisdiction to another by utilizing favorable tax rates. Through PMK No 213/PMK.03/2016 the government has set criteria for companies that obliged to organize and keep transfer pricing documents (TP DOC).

Due to increased complexity of global business, tax authorities including Indonesian Tax Authorities (DGT) requires more detail and comprehensive tax payer’s contemporaneous transfer pricing documentation (TP DOC). Tax payers are required to provide comprehensive and supportive transfer pricing documentation (TP DOC) reports to avoid penalties and transfer pricing adjustment risks by DGT. In line with OECD’s Base Erosion and Profit Shifting (BEPS) Plan, and Country-by-Country reporting, DGT are likely to become even more aggressive in pursuing transfer pricing adjustments and imposing penalties for non-compliance. Our transfer pricing services area are:

Design, planning and implementation Transfer Pricing Strategy

Taxindo Prime Consulting advise companies and multinational groups, at national and international level, in the design and planning of the most proper transfer pricing policy for their business strategy and operations and assist them in the further implementation of the policy. A comprehensive, supportive, clear and well-articulated Transfer Pricing Documentation (TP DOC) is a neccesity, thus easier to manage, reduces audit risk, and easier to defend in front of tax authorities. An appropriate transfer pricing strategy can optimize cash management, value of the companies and helps to avoid disruption of day-to-day operations.

Business Restructuring and Tax Efficient Global Value Chain

Taxindo Prime Consulting provide advice on Transfer Pricing in the process of internationalization, business restructuring and optimizing tax efficient global value chain, both in setting the new related operating as well as in the justification and validation of these business processes for Transfer Pricing purposes.

Transfer Pricing Diagnostic Health Check

Taxindo Prime Consulting is ready to provide a diagnostic health check to identify inappropriate transfer pricing policies, business operations and inadequate documentation in order to identify risks and minimize them to avoid Transfer Pricing adjustments and the threat of penalties. Some advices will be suggested to improve the transfer pricing policies, business process and documentations. A voluntary transfer pricing adjustments by taxpayer may be suggested in order to avoid more huge transfer pricing adjustments by DGT.

Interim Reviews and Monitoring

Taxindo Prime Consulting recommends to performing interim reviews because mid-year changes to inter-company prices are much easier to manage than reacting to surprises after year-end. A six-monthly and third quarter review can reduce the risk of unexpected surprises. Taxindo Prime Consulting is also able to assist you in to do Interim Reviews and Monitoring and provide some advisory to manage the ‘potential’ transfer pricing risks.

Preparation of “Ready to Tax Audit” Transfer Pricing Documentation (TP DOC) and Reporting (Full Study Transfer Pricing Documentation)

Taxindo Prime Consulting is ready to assist in preparing contemporaneous transfer pricing documentation for submission to DGT. The documents should show that the transactions carried out conform to OECD and Indonesian transfer pricing tax regulations, particularly to comply with Ministry of Finance Regulation Number 213/PMK.03/2016 (PMK 213). In order to manage, reduces audit risk, and easier to defend in front of tax authorities, a comprehensive, supportive, clear and well-articulated transfer pricing documentation should be prepared.

Preparation Transfer Pricing Documentation (TP DOC) to Comply with Ministry of Finance Regulation Number 213/PMK.03/2016 (Limited Study Transfer Pricing Documentation)

Taxindo Prime Consulting is ready to assist in preparing simplified contemporaneous transfer pricing documentation (TP DOC) for submission to DGT to comply with Ministry of Finance Regulation Number 213/PMK.03/2016 (PMK 213).

Transfer Pricing Documentation (TP DOC) Reviews

Taxindo Prime Consulting provide services in reviewing and preparing a Check List based on the Company’s Transfer Pricing Documents (TP DOC).

This entail the review of the Company’s Transfer Pricing documents (TP DOC) to be able to list the work to be carried out, items to be completed as well as customise the Company’s documentation according to local needs.

On completion of the check list of the Company’s documentation, collection of additional data, inclusion of the results of discussions and feedback from the Indonesian subsidiaries, we will submit a report recommending the completion of missing information, additional work to be competed as well as our conclusions and recommendations.

We provide two options in preparing the report:

The subsidiary/company itself completes the report based on our findings;
Our firm prepares the report based on our findings. This includes a Transfer Pricing Risk Assessment and a Report on the conduct of a local benchmarking and ,if necessary, an economic analysis.

Representation and Dispute Resolution

To attain a greater degree of legal certainty, there is a possibility for companies to reach Advance Pricing Agreements with the tax authorities thus allowing the company to fix the transfer pricing policy in a particular controlled transaction. TPC is able to assist you in adopting a proactive approach and manage the entire negotiation process in Advance Price Agreements with the one (DGT) or more tax authority, granting greater legal certainty to the client, where your transfer pricing methodology can be agreed upon in advance.

Advance Pricing Agreements (APA)

To attain a greater degree of legal certainty, there is a possibility for companies to reach Advance Pricing Agreements with the tax authorities thus allowing the company to fix the transfer pricing policy in a particular controlled transaction. Taxindo Prime Consulting is able to assist you in adopting a proactive approach and manage the entire negotiation process in Advance Price Agreements with the one (DGT) or more tax authority, granting greater legal certainty to the client, where your transfer pricing methodology can be agreed upon in advance.

MAP (Mutually Agreed Procedures)

Should adjustment of transfer prices occur, a double taxation situation can arise. Taxindo Prime Consulting offers advice on Transfer Pricing and possible solutions to avoid double taxation, both at accounting and at tax levels. It is important to conform all company’s transfer pricing documentations according to the existing regulations. Taxindo Prime Consulting assists taxpayers in resolving Mutual Agreement Procedures for the elimination of double taxation or MAPs and in the preparation of international arbitration conventions.