Course 4: Transfer Pricing Documentation

The tax authorities have recently issued a bundle of rulings regarding special relationship transactions, including PER-34/PJ./2010 concerning Corporate Income Tax Return.

The ruling obliged enterprises engaged in related party transactions to fill in the 3A Attachment as a direct statement that the transactions concerned are consistent with the arm’s length principle.

Unfortunately this is not as easy as it seem. Subsequent to the above requirement, enterprises are required to provide evidence of the arm’s length nature of their related party transactions by preparing a transfer pricing documentation. Failure to deliver this documentation on a timely manner, usually results in an imposed correction and corresponding penalties by the tax authorities.

This course will address issues relating to transfer pricing documentation requirements in accordance with the Indonesian legislation and the OECD Guidelines. In the end, participants are expected to be able to prepare and defend their own transfer pricing documentations.

Course Material:

Transfer Pricing Documentation Framework:

1. Data requirements;

2. Characterization of the Entities;

3. Functional Analysis;

4. How to Select and Search Comparable (Internal Vs External Comparable);

5. How to select Profit Level Indicator (PLI);

6. Transfer Pricing Methodologies (Hierarchy Vs Most Appropriate Method):

   • Comparable Uncontrolled Price Method (CUP);
   • Resale Price Method (RPM);
   • Cost Plus Method (CPM);
   • Transactional Net Margin Method (TNMM);
   • Profit Split Method;

7. Financial Statement Segmentation (Split Cost to Support TP Documentation);

8. Documenting the results.

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