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