Transfer Pricing Analysis on Intra-Group Services and the Related Transfer Pricing Disputes from Indonesian Tax Perspectives

摘要

After analyzing transfer pricing cases on intra-group services transactions in Indonesia which have been settled in the Indonesian Tax Court and/or Supreme Court within the year 2013 to the present day, the result shows that the corrections made by the Directorate General of Tax ("DGT") on intra-group services transactions in Indonesia are mostly because the taxpayer lacked supporting evidences to prove the existence issue, the benefit issue, and the arm's-length charges. Almost half of the Tax Court's decisions were in favor of the taxpayer, with most considering that the supporting evidences provided by the taxpayer before the tax appeal process were already considered sufficient and 80% of the Supreme Court's decisions upheld the Tax Court's decisions. With regard to the OECD's recently issued transfer pricing guidelines relating to intra-group services, which discuss the simplified approach for compliance to the arm's-length principle of low value-adding services, due to Indonesia's specific economic condition, which is below the economic condition of more developed countries where the related party service provider operates, and the intra-group services are inclined to be seen to have been arranged with transfer pricing motives.