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.