Transfer Pricing Documentation in Indonesia: What Management Should Ask

Indonesia's transfer pricing rules were consolidated in PMK-172/PMK.03/2023. For companies with related-party transactions, the regulation sets out the arm's length principle, documentation requirements, and related procedures. For management, the practical questions are what must be prepared, by when, and whether the documentation would hold up if examined.

Questions for the finance team

• Which documentation obligations apply to us this year, based on the current thresholds?
• Does our functional analysis describe what our people actually do?
• Are intercompany agreements consistent with how transactions are carried out?
• Can we evidence the benefit of services and the use of intangibles we pay for?
• Is our local documentation consistent with the group's master file and global policy?

Why consistency matters

Tax authorities increasingly compare information across documents and jurisdictions. Differences between the local file, the master file, financial statements, and filed returns are often the starting point for questions during an audit.

Good documentation explains the business first, and the numbers second.