Transfer Pricing in Indonesia: Documentation a Subsidiary Needs
Transfer pricing in Indonesia for a subsidiary: the four thresholds for a master file and local file, when they must be ready, and what reaches the tax office.
- Minister of Finance Regulation PMK 172/2023 was set and promulgated on 29 December 2023 and governs transfer pricing documentation from tax year 2024. Article 3(1) requires arm's-length pricing on every related-party transaction. Articles 16 to 19 set who keeps the documents, when they must be ready and the summary attached to the annual return. Articles 22 and 23 cover the country-by-country report and its notification. Article 32 sets the language, and Article 34 the handover on request. Articles 36 and 37 cover the tax office's re-determination and the deemed dividend. Articles 41 and 55 provide for the mutual agreement procedure and advance pricing agreements. Article 74 revoked PMK 213/2016.
- The Income Tax Law (UU 7/1983 as amended by UU 7/2021) gives the tax office the power to re-determine income between related parties in Article 18(3). Article 18(4) defines a special relationship by shareholding, control or family. Article 17(1)(b) sets the corporate rate.
- Director General of Taxes Regulation PER-11/PJ/2025 lists the related-party attachments to the annual corporate return in Article 85(1)(b).
- Under the General Tax Provisions Law (KUP, UU 6/1983 as amended by UU 28/2007), Article 3(3)(c) sets when the annual corporate return is due. Article 28(11) requires tax records to be kept in Indonesia.
Transfer pricing in Indonesia starts with one rule: a company prices every transaction with a related party as unrelated businesses would (PMK 172/2023, Article 3(1)). A parent holding 25% or more of a PT (Perseroan Terbatas, a limited company), directly or indirectly, is a related party, and so is one that controls it (Income Tax Law, Article 18(4)). Once the company crosses any one of four thresholds, it also keeps a master file and a local file showing how those prices were set. The Minister of Finance Regulation PMK 172/2023, in force since 29 December 2023, governs this from tax year 2024 (Article 73(3)).
When transfer pricing in Indonesia needs documentation
Each figure is measured on the previous tax year, and meeting any one of them is enough (PMK 172/2023, Article 16(3)). The IDR 5 billion test applies to each kind of dealing separately, not to their total. A tax year shorter than twelve months is scaled up to a full year before the figures are compared (Article 16(6)).
The regulation’s own worked example is a company below the revenue figure that still needs the files, because the royalties it pays within its group pass the per-category mark (Annex A, Example 1).
A company under every threshold keeps no formal files. Its group prices must still stand up as arm’s length (Article 16(7)).
The three documents
The regulation names three documents: a master file on the group, a local file on the Indonesian company, and a country-by-country (CbC) report for the group as a whole (Article 16(2)).
| What it covers | Ready by | How it reaches the tax office | |
|---|---|---|---|
| Master file | The group's structure, businesses, intangibles, financing and consolidated accounts (Article 29) | 4 months after year end | Handed over on request; a summary is attached to the annual return |
| Local file | The company's own related-party dealings and how each price was set (Article 30) | 4 months after year end | The same: on request, with a summary in the return |
| CbC report | Group-wide figures, split by country | 12 months after year end | A PT under a foreign parent files a notification; the report only where the parent's country cannot supply it |
For most subsidiaries of a foreign group, the CbC report itself is not theirs to file. The IDR 11 trillion figure often quoted applies to a group whose ultimate parent is Indonesian (Article 16(4)).
A PT under a foreign parent files a notification through the tax office’s online portal (Article 23(1)). It files the report only if the parent’s country does not require one, has no information-exchange agreement with Indonesia, or cannot supply it (Article 16(5)). Even then, the test is a group revenue of EUR 750 million, or the parent country’s own threshold (Article 22(1)(d)).
The files are prepared from what was known when each transaction took place, rather than reconstructed at the year end (Article 17(1)). Royalties, interest and service fees paid to the parent have a monthly side as well, covered in our guide to withholding tax on payments.
Deadlines through the year
For a company whose financial year ends in December, the calendar looks like this.
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Price each deal
Set and record each related-party price when the transaction happens.
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Files ready
Both files exist, dated by a signed statement, and their summary joins the annual return.
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CbC notification
The notification goes in through the online taxpayer portal.
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Hand them over
If the tax office asks for the files, it gets them within one month.
The dates come from PMK 172/2023, Articles 17(1), 18, 19, 23(4) and 34(2), and the annual return is due on the same 30 April (General Tax Provisions Law, Article 3(3)(c)). A request comes during compliance supervision or an audit; our guide to how a tax audit runs covers the audit itself. The files are kept in Indonesia for ten years, like the company’s other tax records (General Tax Provisions Law, Article 28(11)).
Four things often assumed
What this means for you
For most subsidiaries, transfer pricing in Indonesia comes down to pricing group dealings as unrelated parties would, recording the reasoning as you go, and having the files ready when the annual return is due. This is what we take off your hands:
- The related-party attachments in the annual corporate return, completed when we prepare it.
- The master file and local file, as a separate engagement. We work with the parent’s group tax team to obtain the master file.
- The CbC notification, filed for you at a separate fee.
- Support if the tax office asks for the files or examines the pricing, charged separately.
If the tax office decides a price was not at arm’s length, it can adjust the company’s income or deductions (PMK 172/2023, Article 36), and files kept on time are where that review starts (Article 36(3) and (4)). Advance pricing agreements and mutual agreement procedures (Articles 55 and 41) exist to settle prices ahead of time or resolve double taxation.
The annual return itself sits within our corporate tax and compliance work.