Page 3 - Newsletter (Indonesia Adopts CbC Reporting and New Transfer Pricing Documentation Requirements)

DDTC Tax Newsletter 01 I Jan 2017 Page 3 of 3

Indonesia Adopts CbC Reporting and New Transfer Pricing
Documentation Requirements

Other Important Changes
tax year 2016 must be filed along the 2017 tax return.
Note that, MoF 213/2016 requires that CbC reports are
Previously transfer pricing documentation
created within 12 months after the end of the tax year.
requirements does not stipulate language requirements.
Penalties As such in practice, many documentations were written
in English. MoF 213/2016 now requires that all transfer
pricing documentations must be written in Bahasa
MoF 213/2016 does not impose specific penalties
Indonesia. Documentation in foreign language and
for non-compliance, but rather refer to the General
foreign currency is permitted by approval from the
Procedures and Tax Provision Law. MoF 213/2016
Minister of Finance, nonetheless such documents must
however specify the following non-compliance events:
be accompanied with a translation in Bahasa Indonesia.
• Transfer pricing documentations is not based on
In addition noteworthy is the change of terminology
contemporaneous data and information. In such case,
used. Transfer pricing documentation is now referred
the taxpayer is deemed not to have applied the arm’s
as “price setting document”. Further there is special
length principle.
clause concerning the timing of the availability of
• Non-compliance during monitoring, audit, preliminary information and data used in the documentation. The
tax crime investigation, or tax crime investigation i.e. regulation also requires a statement letter indicating
late submission or failure to submit a transfer pricing when the documentation is created. Clearly, the new
documentation when requested by DGT. In case of transfer pricing documentation must now be based on a
late submission, the transfer pricing documentation contemporaneous basis and use an ex-ante perspective.
submitted by the taxpayer cannot be considered in the
remaining course of the ongoing procedure. While, in Taxpayers are expected to have a robust transfer
case of failure to submit, the taxpayer is deemed to pricing price setting policies based on comparable
have not conducted an appropriate bookkeeping. data that is available before or during transactions. In
other words, taxpayer may consider applying a pro-
• Failure to submit the statement letter on master file
active intercompany margin management and internal
and local file documentation and/or CbC report during
coordination so as to ensure an arm’s length behavior.
tax return filing. MoF 213/2016 does not specify
the consequences in this event, however generally
documents that are required to be submitted along
the tax return, but not submitted by the taxpayer, may
result that the tax return is considered not complete.

CoNNECt WIth us:
With just one click

Authors: DDtC

Menara satu sentra Kelapa Gading
B. Bawono Kristiaji, s.E., M.s.E., Msc., ADIt 6 floor Unit #0601 - #0602 - #0606
th
Partner, Research and Training Services at DDTC Jl Bulevar Kelapa Gading LA3 No.1
contact: [email protected] Summarecon, Kelapa Gading, Jakarta Utara 14240 - Indonesia
Phone: + 62 21 2938 5758 I Fax: + 62 21 2938 5759
romi Irawan, s.E., M.B.A., LL.M Int. tax
Partner, Transfer Pricing Services at DDTC
Contact: [email protected] The information herein is for general purposes only and is not intended to
address the circumstances of any particular individual or entity. This content
should not be used as reference for consultation with professional advisors.
Yusuf Wangko Ngantung LL.B, LL.M Int. tax., ADIt © 2017 DDTC is a research and knowledge based taxation institution and a
Senior Manager, Transfer Pricing Services at DDTC centre of a number of taxation business activities units with high standards,
Contact: [email protected] consultation services, a center for review and research, taxation journals, a
training centre, a provider of tax law documents, a library, and taxation news
portal.
The authors would like to thank Darussalam (Managing We were established in 2007 by Indonesian well known taxation experts,
Partner at DDTC), Danny Septriadi (Senior Partner at DDTC) Darussalam and Danny Septriadi. Our team consists of multidisciplinary
for their valuable input, insight and constructive discussions. specialists, professionals, experts, and researchers.