BERITA TERKINI
JAKARTA, DDTCNews – Transfer pricing does not necessarily involve tax avoidance or other negative connotations.
Senior Manager of DDTC Consulting, Pretty Wulandari, stated that transfer pricing is inherently neutral. According to her, transfer pricing is a common and unavoidable aspect of the operations of multinational enterprise (MNE) groups.
“Literally, it is about pricing. For example, multinational companies inevitably engage in transactions among entities within their group. When such intercompany transactions occur, a price must be determined,” she explained during a guest lecture titled Exploring Concepts, Challenges and Opportunities in Transfer Pricing on Wednesday (11/6/2025).
On another note, the guest lecture was moderated by Gita Arasy Harwida, a lecturer at the Accounting Department of Trunojoyo University Madura (UTM). The event, organised by the Accounting Department of the Faculty of Economics and Business (Fakultas Ekonomi dan Bisnis/FEB in Indonesian) at UTM, was attended by approximately 233 participants.
Pretty further elaborated that there are 3 key elements closely related to transfer pricing: (i) controlled transactions; (ii) (uncontrolled) comparable transactions; and (iii) the assessment of the arm’s length nature of controlled transactions based on comparables.
To ensure that transfer pricing transactions are considered arm’s length and not viewed as tax avoidance by the tax authorities, taxpayers must apply the arm’s length principle (ALP or prinsip kewajaran dan kelaziman usaha/PKKU in Indonesian) in all controlled transactions.
She outlined 4 key stages in conducting an ALP analysis: (i) comparability analysis; (ii) functional analysis; (iii) selection of the transfer pricing method; and (iv) determination of the arm’s length price.
To demonstrate that transfer prices comply with the ALP, taxpayers must substantiate them through transfer pricing documentation (TP Doc), which contains detailed information on transactions conducted between related parties.
Pretty explained that TP Doc is presented in 3 types of documents, commonly referred to as the 3-tiered approach, consisting of: the master file; the local file; and the country-by-country report (CbCR).
“TP documentation should not be seen as a burden, but rather as a key defence when tax authorities exercise their power to audit or assess tax compliance. Through TP Doc, we must be able to demonstrate that we have complied with the applicable regulations,” she added.
Pretty also highlighted several challenges in implementing transfer pricing in Indonesia, including the need for continuous preparation of TP Doc. In addition, the relatively short timeframe. Read Avoid Risks, Start TP Documentation as Early as Possible.
The request for TP Doc by the tax office must be fulfilled no more than 1 month. This poses its own challenge. Further, the complexity of facts and the susceptibility to subjective interpretation in applying transfer pricing rules may lead to disputes.
Despite these complexities and challenges, Pretty noted that career opportunities in transfer pricing remain widely open. Such opportunities include roles as academics, tax consultants or in-house tax professionals within multinational enterprise (MNE) groups.
“Domestic TP regulations in various countries generally refer to TP soft law instruments such as the OECD Transfer Pricing Guidelines, the OECD Model Tax Convention and the UN Transfer Pricing Manual. This implies that career opportunities are global, in Indonesia or overseas,” she concluded. (rig)
