Transfer Pricing guide: Indonesia
Read below for more detailed information on transfer pricing regulations, document requirements, and other considerations for Indonesia, as well as recent industry hot topics and key developments in the country's business landscape.
Page updated 1st July 2025
Transfer Pricing regulations
Is the jurisdiction part of OECD/G20 Inclusive Framework on BEPS?
Yes.
Relevant Transfer Pricing regulation
Ministry of Finance Decree No. 172 year 2023.
Is this regulation aligned with the OECD Guidelines
Yes.
Transfer Pricing documentation requirements
Documentation Threshold for Preparation of Local File/ TP Documentation
Meet any of the following criteria in the previous tax year:
- Have gross revenue exceeding IDR 50,000,000,000.00 (fifty billion rupiah) in one tax year.
- Have the value of Affiliated Transactions exceeding a specific threshold in one tax year:
- More than IDR 20,000,000,000.00 (twenty billion rupiah) for tangible goods transactions. OR
- More than IDR 5,000,000,000.00 (five billion rupiah) for each type of service provision, interest payments, utilisation of intangible goods, or other affiliated transactions.
- Have an Affiliated Party located in a country or jurisdiction with a corporate income tax rate lower than the rate specified in the regulations concerning income tax
Documentation Threshold for Preparation of Master File
Consolidated Group of Company which has intercompany transaction(s).
Documentation Threshold for Preparation of Country by Country Report
A domestic taxpayer who is the ultimate parent entity of a Business Group is required to prepare and keep the Master File, Local File, and Country-by-Country Report if the group's consolidated gross revenue is at least IDR 11,000,000,000,000.00 (eleven trillion rupiah) in the tax year prior to the reporting year.
A domestic taxpayer acting as a constituent entity must submit the Country-by-Country Report if the ultimate parent entity is a foreign tax subject and the country or jurisdiction where the parent entity is domiciled meets any of the following conditions:
- Does not require the submission of a Country-by-Country Report
- Does not have a tax information exchange agreement with the Government of Indonesia
- Has an agreement with the Government of Indonesia regarding tax information exchange, but the Country-by-Country Report cannot be obtained by the Indonesian Government from that country or jurisdiction
Submission of Local File, Master File, and CbC Report Required? If so, when?
Not applicable to Indonesia.
If No Submission Required, any Other Deadline?
Yes; see below.
Other Documentation Requirements
None.
Does TP documentation / Local file Need to be Prepared Contemporaneously with Tax Return Filing (i.e., before filing the return)?
These documents must be available to the taxpayer latest 4 (four) months after the end of the tax year. A statement regarding the availability time must be attached.
A summary of the Master File and Local File must be submitted as an attachment to the annual Corporate Income Tax Return for the relevant tax year. The full Master File and Local File must be submitted to the Director General of Tax latest 1 (one) month from the date of request in the context of compliance supervision and examination. Submission for other purposes follows different timelines specified in tax regulations.
Transfer Pricing Specific Returns
Preparation of TP Return Required?
Not applicable to Indonesia.
Deadline for TP Return Filing
Not applicable to Indonesia.
Key information to be included in the TP Return
Not applicable to Indonesia.
Benchmarking - Local Tax Authority Preferences
Local vs Regional Comparables Set
Not applicable to Indonesia.
Single-Year vs Multi-Year Analysis
Not applicable to Indonesia.
Public vs Private Comparables
Not applicable to Indonesia.
Interquartile Range or Full Range
Interquartile.
Transaction-Based or Aggregate Approach, or Both
Not applicable to Indonesia.
How Often are Benchmarking Sets Renewed (financial update versus full scope BMS preparation)
Not applicable to Indonesia.
TP Penalties
In Case of Delayed Submission of Documentation
TP documents which are submitted beyond deadlines will not be considered.
In case of Income Adjustments in Course of a Tax audit
Tax Authority has the authority to determine profit of related parties transaction(s) without considering late TP document submission(s).
Other Considerations
APA & MAP Availability
Yes.
Applicability of Safe Harbour Rules
Not applicable to Indonesia.
Critical Transfer Pricing Issues Prevailing in the Jurisdiction, if any
Unavailability of local comparables. TP Method and comparables are often challenged by Tax Authority.
Criteria/ Guidelines for Transfer Pricing Audit/ Assessments by Tax Authority
Periodically losing taxpayers are highly scrutinised by Tax Authority.
Relevant Regulations and Rulings with Respect to Thin Capitalisation or Debt Capacity in the Jurisdiction
Not applicable to Indonesia.
In Indonesia, the transfer pricing documentation (TPD) requirements have undergone significant updates with the introduction of Minister of Finance Regulation No. 172 of 2023 (PMK 172), which took effect from December 29, 2023. This regulation mandates that taxpayers prepare, maintain, and submit comprehensive documentation that demonstrates compliance with the arm's length principle in their controlled transactions.
Notably, while the changes to TPD requirements will be fully implemented for tax year 2024, adjustments in applying the arm's length principle are required for the 2023 documentation. The updated requirements emphasize the importance of geographical comparability, necessitating the use of comparable data from the same jurisdiction as the tested party.
Additionally, the regulation introduces heightened documentation standards for specific transaction categories, such as services and intangible assets, and shifts the burden of proof to taxpayers regarding the use of multiple-year analyses. Overall, these changes aim to enhance compliance and facilitate tax authorities' ability to review transfer pricing analyses, thereby reducing the potential for disputes.
The transfer pricing audit environment in Indonesia is becoming increasingly complex and rigorous, reflecting a global trend towards heightened scrutiny of intercompany transactions. Audits are typically conducted as part of broader corporate income tax or VAT audits, with the Directorate General of Taxes (DGT) employing a framework established by the Income Tax Law and various regulations.
Recent developments, particularly the introduction of mandatory secondary adjustments, have intensified the stakes for taxpayers, as these adjustments can lead to additional tax liabilities based on excess profits identified during primary adjustments. The audit process often involves disputes over benchmarks, comparability, and the appropriateness of transfer pricing methods, with taxpayers frequently contesting the DGT's assessments.
Moreover, the DGT has been known to apply inconsistent practices regarding secondary adjustments, leading to further complications and potential double taxation issues. As a result, taxpayers are increasingly seeking remedies through domestic and international dispute resolution mechanisms, including tax objections and mutual agreement procedures, to mitigate the risks associated with transfer pricing audits in this dynamic environment.
In Indonesia, the Advanced Pricing Agreement (APA) and Mutual Agreement Procedure (MAP) mechanisms serve as vital tools for managing transfer pricing disputes and ensuring compliance with tax regulations. An APA is a proactive agreement between a taxpayer and the Directorate General of Taxes (DGT) that establishes the transfer pricing methodology to be employed for specified transactions over a set period, thereby providing certainty and minimising the risk of double taxation.
To enter into an APA, taxpayers must demonstrate the relevance and appropriateness of their proposed transfer pricing methods and provide comprehensive documentation to support their application. On the other hand, the MAP is designed to resolve disputes arising from the interpretation or application of tax treaties, particularly concerning transfer pricing adjustments.
Under the MAP, affected taxpayers can seek assistance from the DGT to negotiate and resolve issues with foreign tax authorities, ensuring that any double taxation resulting from differing interpretations of transfer pricing laws is mitigated. Both mechanisms require thorough documentation and adherence to specific procedural guidelines, thereby fostering transparency and cooperation between taxpayers and tax authorities in Indonesia.
