Page 2 - Newsletter (Indonesia Adopts CbC Reporting and New Transfer Pricing Documentation Requirements)

DDTC Tax Newsletter 01 I Jan 2017 Page 2 of 3

Indonesia Adopts CbC Reporting and New Transfer Pricing
Documentation Requirements

3. A “CbC” report that must be prepared in accordance with Indonesia but a CbC report cannot be obtained
with the template provided in the attachment of MoF by Indonesia from such jurisdiction.
213/2106. The template requires MNE’s to report
Note hereby that in contrast with BEPS Action Plan 13
information on its affiliated parties, including amount
recommendation, MoF 213/2016 defined “parent entity”
of revenue, profits, income tax paid and accrued,
as a member entity of a group of entities that have direct
employees, retained earnings and assets. In addition,
or indirect control over one or more member entities
information regarding functions performed and
within the group and that has an obligation to prepare a
business activities by each entity in a particular tax
consolidated financial reporting according to Indonesian
jurisdiction must also be disclosed.
GAAP and/or stock exchange regulations, without
referring to the criteria of the non-existence of any
In general, the contents required in the master file,
other entity that owns directly or indirectly the parent
local file and CbC report are in line with BEPS Action Plan
entity concerned. Therefore CbC reporting requirement
13 recommendations.
does not apply only to ultimate parent entities but also
Taxpayers who conducts affiliated transactions and to member entities of a MNE that has the obligation to
that fulfills the following criteria must prepare a two- conduct a consolidated financial report. In such case,
tiered transfer pricing documentation, i.e. master file and only CbC information concerning the entities owned
local file: direct or indirectly by the reporting entity are required
to be reported.
• Taxpayers with a gross revenue in one tax year more
than IDR 50,000,000,000 (fifty billion rupiah); or The policy behind this deviation is to ensure the
availability of CbC reports to the DGT. Such CbC reports
• Taxpayers with an accumulated affiliated transactions
may also be useful to map in a more clear way the value
amounting to more than IDR 20,000,000,000 (twenty
creation and contribution made by each member entity
billion rupiah) for transactions pertaining to tangible
in the same supply chain. It is expected that the DGT
assets or more than IDR 5,000,000,000 (five billion
will issue further clarifications concerning which MNE
rupiah) for transactions pertaining to intangible
group operating in Indonesia will require to, in any case,
assets, services, interest payments or other affiliated
prepare a CbC report.
transactions; or
• If there are transactions is conducted with affiliated Administration and Filing
persons that are tax resident in a jurisdiction with a
lower statutory tax rate than Indonesia (lower than
25%). 1 MoF 213/2016 states that the regulations are in force
as of 1 January 2017. The intention of the MoF is to apply
While, a three-tiered transfer pricing documentation
the new transfer pricing documentation requirements as
i.e. master file, local file and CbC report must be prepared
of tax year 2016 (tax return filing deadline on 30 April
by the following taxpayers:
2017).
• Taxpayers that are considered parent entity of a group
Reporting entities that are required to prepare
of entities with a consolidated gross revenue in one
master files and local files are required to file at the time
tax year of at least IDR 11,000,000,000,000 (eleven
of filing the tax return, a statement letter indicating that
2
trillion rupiah) ; or
such master file and local file documentation has been
• Taxpayers that are subsidiaries of one or more parent prepared in accordance with the regulations, including
entities that is tax resident in a jurisdiction which the period when such documentation has been created.
does not obligate CbC reporting, or does not have an MoF 213/2016 namely requires the date of creation of
exchange of information agreement with Indonesia, the documentation to be within 4 months after the end
or does have an exchange of information agreement of the tax year (e.g. for fiscal year ending on 31 December
2016, the deadline is on 30 April 2017). Note that the
statement letter must follow the template as provided in
1. Previously, the regulations obligated taxpayers to disclose affiliated transaction
and/or transactions with parties domiciled in tax haven jurisdictions in their tax the attachment of MoF 213/2016.
return. DGT Regulation No. PER-39/2009 defined tax haven jurisdictions as a
jurisdiction that imposes no income taxes or a income tax with a statutory rate MoF 213/2016 does not require taxpayers to submit
that is 50% lower than the statutory rate in Indonesia or a jurisdiction that applies
a bank secrecy policy and that prohibits the exchange of information among the master file and local file documentations along
jurisdictions, including for the purposes relating to taxation. Now it appears with the tax return, but only upon DGT request. While,
that all jurisdictions with a statutory rate lower than 25% qualify as low taxed CbC reports must be filed along the tax return of the
jurisdiction targeted by Indonesia transfer pricing regulations.
2. This is in line with the BEPS Action Plan 13 required minimum threshold of subsequent tax year. This means that CbC report for
EUR 750,000,000.- (seven hundred and fifty million euros).