Transfer Pricing Documentation for Multinational Subsidiaries in Indonesia: Requirements, Thresholds, and Latest Updates

A finance manager at the Jakarta subsidiary of a regional manufacturing group opens Coretax, the tax authority’s online administration system, to file the annual corporate income tax return. It asks for a summary of the Transfer Pricing Documentation that head office assumed someone else had prepared. Nobody had.

Under Minister of Finance Regulation (PMK) No. 172 of 2023, a subsidiary above the thresholds must hold a master file and a local file within four months after its fiscal year ends. Both go to the Directorate General of Taxes (DGT) within one month of a request. 

A summary, the Ikhtisar, is also filed as Attachment 10D of the annual return in Coretax under DGT Regulation (PER) No. 11/PJ/2025. Across the files Business Hub Asia reviews, mismatches between that summary, Attachment 10A, and the statutory accounts are the main trigger for queries.

The barrier is technical. PMK 172/2023 prescribes how the files must be built, from the content of each tier to the order of preferred pricing methods, so a generic group template rarely satisfies it.

The cost reaches cash flow. Under Minister of Finance Regulation No. 28 of 2026, an audit correction above 5 percent of fiscal profit within three tax years blocks Certain Criteria Taxpayer status, the route to preliminary refunds.

This guide serves finance directors, tax managers, and controllers at foreign-owned companies, including PT PMA (Penanaman Modal Asing, or foreign investment limited liability company) entities. Readers can judge which documents apply, how technical the standard is, and what to prepare next.

What Is Transfer Pricing Documentation and Why Does Indonesia Require It?

Transfer Pricing Documentation is the set of records showing that prices between affiliated companies match what independent parties would agree. In Indonesia it has three tiers: a master file, a local file, and a Country-by-Country Report (CbCR).

PMK 172/2023, effective 29 December 2023, replaced PMK No. 213/PMK.03/2016. It follows the three-tier model of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Action 13.

Table 1. The three tiers under PMK 172/2023

Which Multinational Subsidiaries Must Prepare Transfer Pricing Documentation?

PMK 172/2023 applies a one-year look-back. A taxpayer with affiliate transactions this year prepares a master file and local file if it met any criterion in Table 2 last year.

Table 2. Master file and local file criteria (previous tax year, any one)

Below every threshold, only the documentation duty falls away, and the arm’s length principle still governs each affiliate transaction. Client work shows that fast-growing entities often learn of the obligation while preparing the next return, because the look-back delays it by a year.

Why Is Transfer Pricing Documentation a High-Stakes Matter for Indonesian Subsidiaries?

The standard is technical, and PMK 172/2023 itself sets it. Its guidelines cover:

• Required content of the master file and local file, including a functional analysis of the Indonesian entity
• Comparability analysis using independent comparables
• A hierarchy of pricing methods, with a rationale for the method chosen
• Use of information available when the transaction occurs (Article 17)
• A preliminary analysis stage for specified transactions, such as intangibles, intragroup loans, and restructurings

A generic group template seldom meets these specifications. Business Hub Asia often finds that regional studies need substantial rebuilding around Indonesian-entity data, in Bahasa Indonesia, before they can serve as a local file.

Table 3. Where the pressure builds

The refund row deserves attention from finance teams with large affiliate charges. A correction on management fees, royalties, or intragroup interest can move fiscal profit by more than 5 percent, and the status that speeds up refunds can then be withdrawn.

What Has Changed Recently in Transfer Pricing Documentation in Indonesia?

PER-11/PJ/2025 sets the annual return format in Coretax. Attachment 10A lists affiliate transactions, Attachment 10B records the arm’s length statement, and Attachment 10D carries the Ikhtisar.

In a July briefing, Director General of Taxes Bimo Wijayanto said supervision, enforcement, and collection work would gradually move onto Coretax, as reported by ANTARA. The Ikhtisar, Attachment 10A, and financial statements therefore sit in one system, where consistency gets tested.

PMK No. 111 of 2025 on taxpayer compliance supervision strengthens the DGT’s data research authority and gives the SP2DK, a request letter for explanation of data, a formal footing. The Indonesian Tax Consultants Association (IKPI) notes it widens visibility over group relationships.

Pillar Two adds a 15 percent global minimum tax for groups with consolidated turnover of at least EUR 750 million, under PMK No. 136 of 2024 and PER No. 6/PJ/2026, published on the DGT’s global minimum tax page. Practitioners find these groups reuse intercompany pricing data across both regimes.

For a wider view of how the DGT scores compliance, see the guide to Golden Taxpayer Indonesia

Indonesia Tax Transfer Pricing: How Does the Arm’s Length Principle Work?

Indonesia Tax Transfer Pricing rules rest on the arm’s length principle, known locally as PKKU (Prinsip Kewajaran dan Kelaziman Usaha). The DGT may redetermine income or deductions when affiliates price differently from independent parties, under Article 18 of the Income Tax Law.

The Income Tax Law is Law No. 7 of 1983, as amended by Law No. 7 of 2021. PMK 172/2023 supplies the procedure, including documentation built from contemporaneous data, so a benchmarking study commissioned after a query starts from a weaker position.

How Do Monthly Accounting, Payroll, and the Tax Return Support Transfer Pricing Documentation?

Transfer pricing files are only as reliable as the books behind them. Article 17 of PMK 172/2023 calls for information available when the transaction occurs, so affiliate transactions need correct recording month by month, well before any year-end analysis.

Table 4. Where everyday services meet transfer pricing

Monthly accounting gives each affiliate transaction a counterparty, date, agreement, and amount while the facts are fresh. Business Hub Asia’s monthly accounting service can keep affiliate balances in dedicated accounts, so Attachment 10A figures come straight from the ledger.

Recharging expatriate costs or secondment from headquarters is among the most common affiliate transactions in a foreign-owned subsidiary. The yearly total may count toward the Rp5 billion service threshold in Table 2.

Client Story: Seconded Engineers and an Unreconciled Recharge

A PT PMA in the automotive supply chain hosted engineers seconded from its Japanese parent. Headquarters invoiced the recharge quarterly, while local payroll recorded different allowance amounts. Business Hub Asia aligned the records and corrected Attachment 10A, and its payroll services in Indonesia now document that cost base monthly.

The corporate income tax return ties it together. Reconciling Attachments 10A, 10B, and 10D with the financial statements forms part of the return package, which Business Hub Asia’s tax reporting service prepares with those checks built in.

Transfer Pricing Advisory: When Should a Subsidiary Bring in Specialists?

Transfer Pricing Advisory is specialist support covering pricing policy, benchmarking, local file drafting, the Attachment 10D Ikhtisar, and responses to DGT queries. Subsidiaries typically engage it when affiliate transactions approach a threshold, new intercompany arrangements start, or a DGT request arrives.

Business Hub Asia’s tax consultant service in Indonesia is the usual starting point when a DGT query arrives, with Transfer Pricing Advisory added when affiliate pricing needs deeper analysis.

With a one-month delivery window, a benchmarking study cannot wait for the request. Groups financing through Singapore can also review how the Indonesia-Singapore tax treaty  interacts with intercompany payments.

Client Story: A Management Charge That Did Not Reconcile

A PT PMA owned by a Japanese precision-parts group relied on an English group benchmarking study for its quarterly management charge. When a DGT data query arrived, the study did not reconcile with the statutory accounts.

Business Hub Asia rebuilt the local file around the Indonesian entity’s own data, aligned Attachment 10A, and delivered inside the one-month window.

How Can a Subsidiary Test Its Transfer Pricing Documentation Before the DGT Does?

A four-source check compares what the DGT can view side by side in Coretax. From repeated client reviews, each row pairs a source with its most common mismatch.

Table 5. The four-source consistency check

Your Next Filing Cycle Can Start From a Position of Confidence

A subsidiary that records affiliate transactions correctly every month, keeps payroll recharges traceable, and reconciles its attachments with the financial statements enters each filing season with fewer unknowns. Transfer pricing files then become a by-product of good routines.

Business Hub Asia supports this through its accounting, payroll, tax reporting, and tax consultant services, with Transfer Pricing Advisory available when an entity crosses a threshold. To arrange a consultation, please complete the contact form below.

In the message field, please include three details: the previous year’s turnover, the types of affiliate transactions, and the counterparty countries. These allow the team to tailor the first discussion to the entity’s situation.