Transfer Pricing & Related-Party Transactions
For group companies with loans, services or sales between affiliates.
Transfer pricing documentation (Master File and Local File) and review of related-party transactions, including loans, services and royalties, under the arm's length principle (PMK 172/2023).
Deadlines to watch
4 months
Transfer pricing documentation must be available within 4 months after the tax year ends.
1 month
Deadline to hand over documentation once requested.
DER 4:1
General debt-to-equity cap for deducting borrowing costs, with sector exceptions.
What's included
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Documentation required?
Master File and Local File obligations depend on gross revenue, related-party transaction values and where affiliates are located. We test these criteria every year, not once.
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A defensible arm's length test
Functional analysis, method selection and comparables are built to hold up in an SP2DK or audit, not just to meet a format.
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Affiliate loans and services
Affiliate loans are tested on substance, economic benefit, debt-to-equity and interest rate. Intra-group services and royalties are tested on evidence of benefit and the charging basis.
How we work
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01
Map transactions
All related-party transactions and their values are identified.
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02
Test obligations
Documentation criteria and high-risk transactions are determined.
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03
Analyse
Functional, risk, method and comparables analysis is prepared.
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04
Document
Master File, Local File and the annual return summary are prepared.
Documents we need from you
- Group structure and list of related parties.
- Agreements and details of related-party transactions (goods, services, loans, royalties).
- Financial statements and corporate annual return.
What you receive
- Related-party transaction map and documentation obligations.
- Master File and Local File under PMK 172/2023.
- Affiliate loan review: substance, debt-to-equity and interest rate.
If the tax office asks about this work later
The same team that did it stays with you: SP2DK replies, audits, objections, up to a Tax Court appeal.
Frequently Asked Questions
Who must prepare a Master File and Local File?
Taxpayers with related-party transactions meeting certain criteria, including prior-year gross revenue above IDR 50 billion, related-party transactions above set thresholds, or transactions with affiliates in lower-tax jurisdictions.
What if related-party transactions are not arm's length?
The tax office can redetermine income and costs, including treating part of a loan as equity, and the difference can be treated as a constructive dividend.
We are a small company. Does this matter?
Full documentation may not be required, but related-party transactions must still be arm's length. Shareholder loans are the most commonly adjusted.
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Want to talk about Transfer Pricing & Related-Party Transactions?
Tell us what you need, the period, and the state of your documents. We reply on WhatsApp.
Chat on WhatsApp- +62 851 1730 8880
- info@arunikaconsultant.com
- Sidoarjo, Jawa Timur