Transfer Pricing - Indonesia

Transfer pricing regulations in Indonesia can be traced as far back as article 18 of the ITL of 1983. This law has been amended through reforms in subsequent years.

The definition of related parties for transfer pricing purposes can be found in article 18 of the ITL. It also stipulates that the tax authority has the right to adjust a taxpayer’s taxable income for related-party transactions that are not carried out on an arm’s length basis.

The legal basis of the arm’s length principle is stipulated in article 18(3) of the ITL, where it is stated that transactions between related parties must be consistent with the arm’s length principle. If the arm’s length principle is not followed, the Director General of Tax (DGT) is authorized to recalculate the taxable income or deductible costs arising from such transactions applying the arm’s length principle.

Scope of Legislations

Indonesian transfer pricing regulations apply to both cross-border and domestic transactions between related parties. The regulation states that the following transactions are covered by DGT Regulation PER-32/PJ/2011 on transfer pricing: – cross-border related-party transactions; – domestic related-party transactions, which may have a motivation to benefit from differences in tax rates, inter alia. As of the issuance of MoF Regulation PMK 22/PMK.03/2020, the arm’s length principle shall also be applied to transactions that are affected by related parties which includes uncontrolled transactions where an affiliate of one or both parties determine(s) the counterparty and the transaction price. The transfer pricing rules apply to related-party transactions. Although there is no threshold with respect to the obligation to apply the arm’s length principle, in practice the threshold is set at IDR 10 billion per related parties’ transaction. MoF Regulation PMK 213/PMK.03/2016 about transfer pricing documentation requirements came into force on 30 December 2016. In general, the transfer pricing documentation requirements under MoF Regulation PMK 213/PMK.03/2016 are in line with Action 13 of the BEPS Action Plan. It adopts the three-tiered approach: Master File, Local File and CbC report.
In 2016, the MoF issued transfer pricing MoF Regulation PMK 213/PMK.03/2016 that came into force on 30 December 2016. It applies for fiscal years 2016 and onwards. For transfer pricing purposes, a taxpayer must follow documentation requirements under MoF Regulation PMK 213/PMK.03/2016.
The Master File requirement was introduced in Indonesia by MoF Regulation PMK 213/PMK.03/2016. Article 4(1) of MoF Regulation PMK 213/PMK.03/2016 states that both Master File and Local File must be available no later than 4 months after the end of the taxpayer’s fiscal year. However, the Regulation does not require that these files need to be submitted in the annual tax return; instead, under article 7 of MoF Regulation PMK 213/PMK.03/2016, a summary of these files using a prescribed template/form must be submitted as an attachment in the annual tax return. Article 2(2) of MoF Regulation PMK 213/PMK.03/2016 states that a taxpayer who conducts business with associated parties that meet at least one of the conditions below must submit both a Master File and a Local File: – has gross revenue of more than IDR 50 billion in the prior fiscal year; – conducts related-party transactions in the prior fiscal year with a value of: (i) more than IDR 20 billion for tangible goods transactions, or (ii) more than IDR 5 billion for service, interest, intangible goods or other transactions; and/or – has a transaction with an associated party located in a country with a lower income tax rate (the Indonesian income tax rate for a company is 25%). Once a taxpayer met one of the conditions above, the taxpayer must submit both a Master File and a Local File.
Every parent entity with consolidated gross revenue of at least IDR 11 trillion must prepare a CbC report. Article 1(8) of MoF Regulation PMK 213/PMK.03/2016 defined parent entity as any members of a business group that (i) either has control, directly or indirectly, over one or more of the other members of the business group; or (ii) has an obligation to provide a consolidated financial report under Indonesian generally accepted accounting principles (GAAP) or stock exchange regulations. The CbC report under MoF Regulation PMK 213/PMK.03/2016 is more detailed compared to the CbC report under Action 13 of the BEPS Action Plan. There are two main components in the CbC report: the CbC working paper and the CbC report itself. The CbC working paper must be prepared first in order to complete the CbC report. The DGT provides a prescribed template in MoF Regulation PMK 213/PMK.03/2016 for both the CbC working paper and the CbC report. MoF Regulation PMK 213/PMK.03/2016 states that the CbC report needs to be submitted as an attachment to the annual tax return in the following fiscal year along with the CbC working paper. However, according to DGT Regulation PER-29/PJ/2017, taxpayers may use a notification receipt published by the DGT as a replacement for the CbC report. The fiscal year in Indonesia begins on 1 January and ends on 31 December. MoF Regulation PMK 213/PMK.03/2016 mentions that the first CbC report is for fiscal year 2016 and needs to be submitted as an attachment on the annual tax return of 2017. The transfer pricing documentation – the Master File, the Local File and the CbC report – must be written in the Indonesian language. A taxpayer that has prior approval to use the English language needs to submit the documentation in the English language accompanied by an Indonesian translation.

Choose the service offering you want to proceed with

Arm's Length Analysis

Transfer Pricing Documentation starting at

For other services

A Transfer Pricing Solutions Provider in Indonesia

Planning & Litigation Support Solutions

We help design and implement Global TP Policy / review Agreements for Multinational Corporations. We also provide TP litigation support services.

Transfer Pricing Documentation Solutions

Transfer Pricing compliance requirements by delivering meticulously prepared Documentation as per Local TP Regulations and global standards.

TP Due Diligence / Health Check Services

We assist in identifying gaps by providing health check up from Legal, Corporate and TP documentation perspective.


We have access to various public financial and company databases, industry and directories which assist us to render comprehensive TP analysis.

Mail Us

Contact our Experts

Gyan Prakash Srivastava [MBA, LL.B.]

Leader - South Asia Practice
17+ years experience in Global Transfer Pricing Documentation, Litigation, BEPS compliance & advisory. During his tenure with PwC & Deloitte he has worked for marquee clients. Gyan specializes in assisting clients in developing cross border business models based on on-ground commercial facts and legal issues.

Udit Gupta [MIA, CA]

Principal North America Practice

12+ years experience in Transfer Pricing & International Taxation in multiple jurisdictions including S.E Asia, USA and India. He has worked with Deloitte Haskins & Sells, Malaysia and with Ernst & Young in Transfer Pricing division.

He is a member of Malaysian Institute of Accountants with enriched experience in Malaysian Transfer Pricing Documentation.

Shopping Basket