Inadequate of TP Doc

Based on Tax Director Circulation letter number PER-32/PJ./2011 concerning about Arm’s Length Principle the minimum analysis must be considered to be performed in preparing TP Doc are as follows:

Functional analysis (FAR) consist of:

1. Function Performed

2. Asset employee

3. Risk assumed


Economic Analysis consist of:

1. Geographic location

2. Market Size

3. Competition aspect

4. Availability of services or product replacement

5. Demand and supply

6. Customer purchasing of power

7. Government rule and policy involvement in market

8. Production cost

9. Date and time of transaction

Company must analyze all aspects comparable items as mentioned above as ruled to fulfill the minimum requirement. If one or more comparable items are not available, our professional’s judgment classified that document as inadequate TP Doc. It could create a big issue between Indonesia tax authority and tax payer.

Transfer Pricing Method

Indonesia Tax authority accepted these following methods:

  1. Comparable Uncontrolled Price / CUP (Metode perbandingan harga antara pihak yang tidak mempunyai hubungan istimewa
  2. Reseale Price Method / RPM (Metode Harga Penjualan Kembali)
  3. Cost Plus Method / CPM (Metode Biaya-Plus)
  4. Profit Split Method / PSM (Metode Pembagian Laba)
  5. Transactional Net Margin Method / TNMM (Metode Laba Bersih Transaksional)
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