Transfer Pricing in Indonesia – What You Need to Know
August 2025
Transfer pricing is more than just a tax matter — it’s a strategic issue that impacts compliance, risk, and profitability for multinational businesses operating in Indonesia. As tax authorities continue to tighten enforcement and increase scrutiny on cross-border transactions, understanding and managing transfer pricing has never been more critical.
What is Transfer Pricing?
Transfer pricing refers to the pricing of transactions between related parties — such as sales of goods, services, royalties, or loans — within a multinational group. The key principle is that these transactions must follow the arm’s length standard, meaning the pricing should be equivalent to what would have been charged between independent entities under similar conditions.
This concept ensures that profits are properly allocated and taxed in the correct jurisdictions, preventing base erosion and profit shifting (BEPS). It is governed globally by OECD guidelines and locally by Indonesia’s Directorate General of Taxes (DGT).
Why Transfer Pricing Matters in Indonesia
Indonesia has one of the most active and rigorous tax administrations in Southeast Asia. Transfer pricing compliance is not optional; it is a legal requirement for companies with related-party transactions. Failing to comply can result in audits, penalties, double taxation, or reputational risks.
Multinational enterprises (MNEs) must submit three-tiered transfer pricing documentation:
- A Master File – detailing the global business structure and transfer pricing policies
- A Local File – describing local operations and related-party transactions
- A Country-by-Country Report (CbCR) – for consolidated group data, if applicable
These documents must be prepared annually and submitted upon request, with deadlines and thresholds strictly enforced.
Moores Rowland Indonesia: Your Transfer Pricing Partner
At Moores Rowland Indonesia (MRI), we understand the complexity of managing transfer pricing in a rapidly evolving regulatory landscape. Our dedicated Transfer Pricing Services team helps clients design and document defensible policies that reflect both global best practices and local compliance obligations.
Our services include:
- Transfer pricing planning and risk assessment
- Preparation of Master Files, Local Files, and CbCRs
- Benchmarking studies based on robust databases
- Transfer pricing audit defense and dispute resolution
- Advisory on value chain alignment and tax-efficient structures
With MRI’s deep knowledge of local tax law and international standards, we empower businesses to operate confidently and sustainably in Indonesia’s tax environment.
Stay Compliant, Stay Ahead
Transfer pricing is not just a one-time obligation — it’s a continuous process that should be integrated into your business strategy. By working with experienced advisors like Moores Rowland Indonesia, companies can ensure full compliance while optimizing their tax position.
Need help with your transfer pricing strategy in Indonesia?
Contact Moores Rowland Indonesia today and ensure your corporate documentation is audit-ready and aligned with current regulations.