Indonesia has revised its tax rules for transfer pricing documentation to conform to global standards and curb tax avoidance, in the hope of optimizing state revenue. This will require companies with overseas subsidiaries and domestic affiliated transactions to complete specific reports in compliance with country-by- country (CbC) reporting standards, as stipulated by the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Action 13.
This action is taken to forestall tax manipulation by corporate taxpayers or foreign corporations that become parent companies of business groups with a gross turnover of Rp11 trillion. Transfer pricing is customarily worked by affiliated companies to appear to reduce profits, so that taxes levied and dividend payments promised will be lower.
