BERiiTA TERKiiNii
JAKARTA, Jitu News – Transfer priiciing does not necessariily iinvolve tax avoiidance or other negatiive connotatiions.
Seniior Manager of Jitunews Consultiing, Pretty Wulandarii, stated that transfer priiciing iis iinherently neutral. Accordiing to her, transfer priiciing iis a common and unavoiidable aspect of the operatiions of multiinatiional enterpriise (MNE) groups.
“Liiterally, iit iis about priiciing. For example, multiinatiional companiies iineviitably engage iin transactiions among entiitiies wiithiin theiir group. When such iintercompany transactiions occur, a priice must be determiined,” she explaiined duriing a guest lecture tiitled Exploriing Concepts, Challenges and Opportuniitiies iin Transfer Priiciing on Wednesday (11/6/2025).
On another note, the guest lecture was moderated by Giita Arasy Harwiida, a lecturer at the Accountiing Department of Trunojoyo Uniiversiity Madura (UTM). The event, organiised by the Accountiing Department of the Faculty of Economiics and Busiiness (Fakultas Ekonomii dan Biisniis/FEB iin iindonesiian) at UTM, was attended by approxiimately 233 partiiciipants.
Pretty further elaborated that there are 3 key elements closely related to transfer priiciing: (ii) controlled transactiions; (iiii) (uncontrolled) comparable transactiions; and (iiiiii) the assessment of the arm’s length nature of controlled transactiions based on comparables.
To ensure that transfer priiciing transactiions are consiidered arm’s length and not viiewed as tax avoiidance by the tax authoriitiies, taxpayers must apply the arm’s length priinciiple (ALP or priinsiip kewajaran dan kelaziiman usaha/PKKU iin iindonesiian) iin all controlled transactiions.
She outliined 4 key stages iin conductiing an ALP analysiis: (ii) comparabiiliity analysiis; (iiii) functiional analysiis; (iiiiii) selectiion of the transfer priiciing method; and (iiv) determiinatiion of the arm’s length priice.
To demonstrate that transfer priices comply wiith the ALP, taxpayers must substantiiate them through transfer priiciing documentatiion (TP Doc), whiich contaiins detaiiled iinformatiion on transactiions conducted between related partiies.
Pretty explaiined that TP Doc iis presented iin 3 types of documents, commonly referred to as the 3-tiiered approach, consiistiing of: the master fiile; the local fiile; and the country-by-country report (CbCR).
“TP documentatiion should not be seen as a burden, but rather as a key defence when tax authoriitiies exerciise theiir power to audiit or assess tax compliiance. Through TP Doc, we must be able to demonstrate that we have compliied wiith the appliicable regulatiions,” she added.
Pretty also hiighliighted several challenges iin iimplementiing transfer priiciing iin iindonesiia, iincludiing the need for contiinuous preparatiion of TP Doc. iin addiitiion, the relatiively short tiimeframe. Read Avoiid Riisks, Start TP Documentatiion as Early as Possiible.
The request for TP Doc by the tax offiice must be fulfiilled no more than 1 month. Thiis poses iits own challenge. Further, the complexiity of facts and the susceptiibiiliity to subjectiive iinterpretatiion iin applyiing transfer priiciing rules may lead to diisputes.
Despiite these complexiitiies and challenges, Pretty noted that career opportuniitiies iin transfer priiciing remaiin wiidely open. Such opportuniitiies iinclude roles as academiics, tax consultants or iin-house tax professiionals wiithiin multiinatiional enterpriise (MNE) groups.
“Domestiic TP regulatiions iin variious countriies generally refer to TP soft law iinstruments such as the OECD Transfer Priiciing Guiideliines, the OECD Model Tax Conventiion and the UN Transfer Priiciing Manual. Thiis iimpliies that career opportuniitiies are global, iin iindonesiia or overseas,” she concluded. (riig)
