Who must prepare transfer pricing documentation in Indonesia?

A company with related-party transactions needs to check more than whether its turnover exceeds IDR50 billion. Master file and local file obligations can also arise from the value of related-party transactions or dealings with an affiliate in a jurisdiction with a lower income tax rate. These are separate tests. PMK 172/2023, Article 16(3).

Use this guide to map each entity’s initial documentation obligations. It focuses on the master file and local file. Country-by-country reporting, or CbCR, requires a separate assessment.

Start with the transactions and relationships

First, identify whether the company has related-party transactions in the tax year being assessed. A special relationship can arise through ownership, control or family relationships. Direct or indirect ownership of at least 25% is one criterion; shareholding is not the only basis. Domestic transactions can also fall within scope. PMK 172/2023, Article 1(6), Article 2 and Article 16(3).

List the counterparties, relationships, transaction types, countries or jurisdictions, and transaction values. Review purchases and sales of goods, services, interest, the use of intangibles and other transactions. Copying the shareholder register is not a complete related-party assessment.

The arm’s length principle also has a broader reach: transactions between unrelated parties can be influenced by a special relationship if an affiliate determines both the counterparty and the transaction price. Distinguish this substantive scope from the documentation threshold tests. PMK 172/2023, Article 1(7) and Article 3.

Check every route to a documentation obligation

For a taxpayer conducting related-party transactions, assess the following criteria. Meeting one can trigger master file and local file obligations; the company does not need to exceed every threshold.

Legal basis: PMK 172/2023, Article 16(3).

Read “more than” precisely. Turnover of exactly IDR50 billion does not exceed that turnover threshold. The company must still check transaction thresholds and the affiliate’s jurisdiction. Likewise, the lower-tax-rate condition does not first require turnover or transactions to exceed IDR50 billion, IDR20 billion or IDR5 billion.

For services and other categories, do not test invoices individually as a way to avoid an annual threshold. Aggregate transactions by category and ask the reviewer to confirm the classification, particularly where a contract combines services, licences and financing. Correct classification requires examining the substance of the transactions.

Use the correct reference year

When assessing documentation obligations for Tax Year 2026, the turnover and related-party transaction thresholds use Tax Year 2025 figures. The documentation itself still explains the transactions for Tax Year 2026. PMK 172/2023, Article 16(3).

The following hypothetical examples assume that the company conducts related-party transactions in 2026, has a 12-month tax year, and has no other trigger beyond those stated.

These examples apply Article 16 for illustration. They are not customer cases or tax decisions.

Check the definitions and special circumstances

Gross turnover for this test includes income from business and outside business, after the deductions specified in Article 16(9), but before the costs of obtaining, collecting and maintaining income. A single sales account may therefore not contain the full amount that needs to be tested. PMK 172/2023, Article 16(9).

A tax year shorter than 12 months requires annualisation. Taxpayers permitted to keep books in a foreign language and a currency other than rupiah must also follow the Minister of Finance’s year-end tax exchange-rate rule when converting the rupiah thresholds. Today’s exchange rate is not a substitute. PMK 172/2023, Article 16(6) and (8).

For an affiliate in a lower-tax-rate jurisdiction, record the jurisdiction and the basis for the rate comparison. The effective tax rate in consolidated accounts, or the amount of tax actually paid, does not by itself answer the statutory rate test.

Separate entity obligations from group obligations

Assess the master file and local file thresholds for the relevant taxpayer. Do not replace the entity’s gross turnover with consolidated group revenue.

CbCR has its own rules. One trigger concerns a resident taxpayer that is the parent of a business group with consolidated gross turnover of at least IDR11 trillion in the preceding tax year. Constituent entities with a foreign parent need further review of the parent, applicable thresholds, report exchange and potential substitute reporting. Being part of a foreign group does not automatically mean every subsidiary must submit a CbC report. PMK 172/2023, Article 16(4)–(5) and Articles 20–23.

Prepare a scoping assessment that can be reviewed

Create one worksheet per entity showing the tax year, reference turnover, transaction values by category, affiliate jurisdictions, source documents and initial conclusion. Mark missing information. Preserve the reviewer’s reasoning where a classification requires judgment.

Software can help collect figures and show their sources. Identifying special relationships, classifying transactions and interpreting the rules still require professional judgment. In Librantic’s model, tax firms review the work and sign the report. How Librantic works.

For entities with the obligation, the master file and local file must be available no later than four months after the end of the tax year. Collect evidence as transactions occur; report completion is not the starting point for gathering support. PMK 172/2023, Articles 17–18.

Need to establish which entities must prepare TP documentation? Request a consultation and include the tax year, number of entities and types of related-party transactions.

Sources:

PMK 172 Tahun 2023, 29 December 2023. Text also checked against the DJP-hosted English version. The Indonesian legal text governs.

Sources reviewed on 12 September 2026. Librantic workflow information refers to the public pages linked in the article.