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Corporate Taxpayers Required to Declare Related Party


Corporate taxpayers in Indonesia, particularly those that have related party transactions and/or transactions with parties that are domiciled in tax haven countries must now prepare their transfer pricing documents in connection with the recent issuance of a regulation by the Director General of Taxation regarding the revised annual corporate income tax return form. Taxand Indonesia investigate in their latest newsletter.

One interesting change to the new annual corporate income tax return form that we need to pay attention to is the addition of a new column regarding the 'Declaration of Related Party Transactions'. This additional new column was not only meant for related party transactions, but also covers declaration of transactions with parties that are domiciled in tax haven countries.


Taxand's Take

With this new annual corporate income tax return, corporates in Indonesia who have related party transaction and/or transaction with parties domiciled in tax haven countries must prepare relevant supporting documents to support how they arrived at the price they used in their transfer pricing transactions.

However, it is a pity that to date the Directorate General of Taxation has not yet provided any guidelines for the Indonesian corporate taxpayers on how to prepare their transfer pricing documents. This is enough to cause difficulty to corporate taxpayers in Indonesia because even if they have already prepared their transfer pricing documents to support their transactions,they do not yet have the specific guidelines from the Directorate General of Taxation. Therefore there's a big possibility that the documents that they have prepared may not be accepted during actual cases in the field.

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Taxand's Take Author