Basic Types of Related-Party Transactions丨Indonesia Tax Guide 2025 (42)
Indonesia
Related-party transactions
2025-03-13 09:09:59
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This issue's introduction
Related-party reporting management
Special Tax Adjustment Policy
Basic types of related-party transactions
The tax authorities have the power to make special tax adjustments for all types of transactions between related parties, to reallocate income and deductions between related parties, and to treat debt as equity to calculate the taxpayer's taxable income based on the arm's length principle.
If a resident individual receives wages or salaries from a non-resident employer, and the payment is in the form of a payment to an affiliated company, the wages or salaries may also be subject to tax adjustments by the tax bureau.
Regulation No. 172 of the Ministry of Finance of 2023 further clarifies the types of transactions covered by transfer pricing rules in Article 4(6), including: intra-group services; transfer and development of intangible assets; loans; other financing activities; sale or purchase of assets; business restructuring; and cost sharing arrangements.
Ministry of Finance Regulation No. 172 of 2023 stipulates that permanent establishments in Indonesia need to provide documents and information on related-party transactions with overseas related parties to determine the transaction price. If relevant information cannot be provided, the transaction price will be determined in accordance with the arm's length principle.
The excitement continues in the next issue...