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

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          Authors:                                              DDtC

                                                               Menara satu sentra Kelapa Gading
          B. Bawono Kristiaji, s.E., M.s.E., Msc., ADIt        6  floor Unit #0601 - #0602 - #0606
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          contact:                        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:                             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:                            consultation services, a center for review and research, taxation journals, a
                                                               training centre, a provider of tax law documents, a library, and taxation news
          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.
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