Transfer Pricing Services
The up rise of globalization in these modern times has resulted in the rapid growth of multinational trade and cross-border intercompany transactions. Subsequently, tax authorities worldwide are increasingly aware to defend their domestic tax bases with intense scrutiny. In light of this, stronger transfer pricing legislations are introduced, including its increased documentation requirements, stiffer penalties for non-compliance, increased information exchange, improved audit staff training and increased inspections and specializations. Although transfer pricing guidelines has been developed by the OECD, which forms the corner-stone for the global tax community, many variants in domestic legislations still exist including among others in Indonesia.
Our multidisciplinary team of transfer pricing specialists are experienced in providing assistance to clients from various business backgrounds in the increasing compliance requirements of transfer pricing legislation.
DANNY DARUSSALAM Tax Center’s Transfer Pricing Services
- A. Transfer Pricing ComplianceOpen or Close
Transfer Pricing Documentation Studies, to evaluate the extent to which transfer prices are consistent with the arm’s-length standard as required under Indonesian tax regulation, as well as the OECD Transfer Pricing Guidelines. The scope of a Transfer Pricing Documentation Study is tailored to address the specific needs of a company relative to the complexity and magnitude of the transactions, number of affiliated members, and geographical regions involved.
Indonesia tax regulations required every taxpayer having intercompany transactions exceeding IDR 10 million to have a contemporaneous transfer pricing documentation studies. The requirement is effective since 1 January 2008.
DANNY DARUSSALAM Tax Center have furnished over 50 companies with its transfer pricing documentation studies. With 99 percent rate of successive engagements, shows that clients are satisfied with our services. Our clients vary from various industries, from CPO industry, automobile industry, oil and gas industry, commodity trader, and many more. Some of their principals are listed in New York, Tokyo, and Indonesia Stock Exchange.
Advance Pricing Agreements, which can be used as an effective tool to negotiate a company-specific arrangement with: (i) domestic and international tax authorities in order to reduce uncertainty and risk, (ii) provide more assurance against income reallocations, and (iii) manage audits. APAs can be entered into on a unilateral, bilateral, or multilateral basis.
Intercompany policy and implementation guidelines design, are created to assist a company in applying and monitoring its intercompany transfer pricing strategies. The objective of utilizing these documents and resources is to standardize and harmonize company-wide global transfer pricing policies, align and synchronize these with management evaluation principles, and provide additional support in the event of an audit. Creating this consistent framework provides credibility to performance measures and instills a sense of equity with respect to how intercompany transactions occur.
The transfer price setting is normally supported by intercompany agreements drafting, to provide a consistent framework to formalize intercompany transfer pricing policies. These documents also present a “form” over “substance” argument upon a potential audit. This will become increasingly important and is already necessary for a number of tax authorities in countries that may give more credence to intercompany transactions that follow the “letter” of agreements, versus the discretion of taxpayers to set transfer prices. Intercompany agreements include technology, trademark, cost-sharing, market expansion, services, and loan agreements, among others.
Arriving from the ideas in OECD Guidelines, especially paragraph 4.9, companies both before and after entering intercompany transactions could prepare or re-look their transfer price setting. DANNY DARUSSALAM Tax Center have assisted clients in designing its transfer price setting, a UK commodity trader giants and a Japanese auto parts manufacturer have been furnished by DANNY DARUSSALAM Tax Center transfer price setting services.
Intercompany agreements drafting, to provide a consistent framework to formalize intercompany transfer pricing policies. These documents also present a “form” over “substance” argument upon a potential audit. This will become increasingly important and is already necessary for a number of tax authorities in countries that may give more credence to intercompany transactions that follow the “letter” of agreements, versus the discretion of taxpayers to set transfer prices. Intercompany agreements include technology, trademark, cost-sharing, market expansion, services, and loan agreements, among others.
- B. Transfer Pricing Audit Defense and LitigationOpen or Close
Defending your company’s transfer pricing, including (i) developing economic analyses to defend arm’s-length pricing strategies, (ii) evaluating and critiquing transfer pricing methodologies and adjustments proposed by tax authority, (iii) recommending sound audit defense approaches, (iv) and providing responses to tax authority;
Dispute resolutions and negotiations generally involve face-to-face interactions with tax authority to assist in rebutting proposed reassessments of income by a tax authority, and preparing companies for litigation, APAs, audit settlements, or Competent Authority proceedings;
Competent Authority submissions with respect to preparing and filing required documents to resolve double taxation disputes; and Litigation support and testimony, providing tax attorneys to represent your company in the tax court, litigation testimony, depositions, and strategy consulting, as well as the creation of submission reports, advocacy position papers, affidavits, and expert witness testimony.