Asia-Pacific Transfer Pricing Handbook

Chapter Fourteen

Transfer Pricing in Indonesia

Indonesia Was one of the earliest countries in Asia to focus on transfer pricing. Indonesia first required enterprises to reflect transfer pricing in 1993. It issued transfer pricing rulings in 2001 and issued a transfer pricing taxation reporting form in 2009.

HISTORICAL BACKGROUND

Indonesia initially had no tax transfer pricing legislation in place, but imposed initial transfer pricing requirements through its issuance of a circular dated March 9, 1993, DGT Circular Letter No. SE-04/PJ.7/1993. The Indonesian government then enacted transfer pricing provisions in Income Tax No.10/1994, Article 18, paragraphs 2 and 3. Indonesia amended the 1984 tax laws in 1994, enacting VAT Law No. 11/1994 Article 2, paragraphs 1 and 2, which coordinates VAT and tax issues.

The Indonesian government issued regulations and rulings in January 2001 as part of its income tax law that was new at the time. The 2001 tax law contains the transfer pricing provisions that are contained in the 1994 statute. The Indonesian government has not yet issued regulations that would fully implement the transfer pricing provisions.

Indonesia’s Foreign Investment Law requires foreign owners to utilize a Perseroan Terbates (PT) company. The PT is subject to transfer pricing audits, but domestic Indonesian companies also can be subject to transfer pricing audits.

TRANSFER PRICING CONSIDERATIONS

Indonesia permits enterprises to apply these transfer pricing methods:

• Indonesia ...