• Transfer Pricing: Country-by-Country Reporting in Indonesia
Newsletter:

Transfer Pricing: Country-by-Country Reporting in Indonesia

16 January 2018

Country-by-Country Report (CbCR) is part of the minimum standard in the Action Plan on BEPS that has been agreed to by G20/OECD member countries for consistent implementation in each country.

A multinational enterprise (MNE) group is required to file a CbCR consisting of tax jurisdiction-wide information relating to the global allocation of the income if it meets a certain revenue threshold. Under Minister of Finance Regulation No. PMK-213/PMK.03/2016, CbCR requirements will definitively apply for Indonesian subsidiaries with a fiscal year end after 30 December 2016.

Requirements and Applicability

PMK-213 Article 2, paragraph 1, letter (c) mentioned CbCR as one of transfer pricing documents required for applicable taxpayers. The CbCR requirement applies to ultimate parent entities and member entities of an MNE having the obligation to provide a consolidated financial report.

Three-tiered transfer pricing documentation, i.e. master file, local file and CbC report must be prepared by the following taxpayers.

  • Taxpayers that are considered as the parent entity of a group of entities with a consolidated gross revenue in one tax year of at least IDR 11 trillion (equivalent to EUR 750 million according to OECD BEPS Action 13).
  • Taxpayers that are subsidiaries of one or more parent entities that is a tax resident in a jurisdiction which does not obligate CbC reporting, does not have an exchange of information agreement with Indonesia, or does have an exchange of information agreement with Indonesia but a CbC report cannot be obtained by Indonesia from such jurisdiction.

Administration and Filing

PMK-213 does not require taxpayers to submit the master file and local file documentation along with the Corporate Income Tax Return (CITR), but only upon Directorate General of Taxation (DGT) request. CbCR must be filed along with the CITR of the subsequent tax year. This means that the CbCR for the 2016 tax year must be filed alongside the 2017 CITR. Note that PMK-213 requires CbCR to be created within 12 months after the end of the tax year.

Penalties

PMK-213 does not specifically mention the consequences of non-compliance for not attaching CbCR to its CITR. However, there are potential penalties on any unpaid tax of up to 50% due to incomplete CITR submission.

 

“BDO INDONESIA PROVIDES A FULL SPECTRUM OF TAX AND BUSINESS ADVISORY SERVICES TO LOCAL ENTERPRISES, PUBLIC-LISTED COMPANIES, MULTI-NATIONAL COMPANIES AND INDIVIDUALS.”

 

For more information on how PT BDO Bisnis Solusi Indonesia can help you in planning and navigate these major changes, please contact our experts:

 

Irwan Kusumanto

Head of Tax BDO Indonesia

ikusumanto@bdo.co.id

 

Prasetyono Hendriarto

Head of Transfer Pricing

phendriarto@bdo.co.id

 

 

 

 

 

For more information on how PT BDO Bisnis Solusi Indonesia can help you in planning and navigate these major changes, please contact our experts:

Irwan Kusumanto , Head of Tax |
Prasetyono Hendriarto , Executive Director |