DDTC Professionals Featured in Global Transfer Pricing Publication
JAKARTA, DDTCNews - Developments in transfer pricing rules are projected to remain a key issue on the global tax agenda in the coming years. Beyond the supervision of controlled transactions that have long been a focus of tax authorities, various new developments at the international level are also expected to increasingly influence the application of transfer pricing.
In the Editor's Preface of the publication Lexology In-Depth: Transfer Pricing Edition 10, editor Sanford Stark elaborates that all countries covered in the publication have, in principle, adopted the arm's length principle (ALP) and referred to the OECD Transfer Pricing Guidelines. Nevertheless, implementation continues to indicate significant differences across jurisdictions.
These differences are evident in the interpretation of the arm's length principle, the prioritised transfer pricing methods, the application of secondary adjustments and administrative aspects, such as documentation obligations and the availability of advance pricing agreement (APA) schemes. Accordingly, transfer pricing practitioners cannot rely solely on the OECD Guidelines but must also understand their specific application in each jurisdiction.
The In-Depth Transfer Pricing Edition 10 report by Lexology, an international legal and regulatory research platform providing analysis, practical guidance, news and legal developments from countries around the globe, thoroughly reviews the implementation across a number of jurisdictions.
"Each chapter summarises the country's substantive transfer pricing rules, explains how a transfer pricing dispute is handled, from initial scrutiny through to litigation or settlement, and discusses the interaction between transfer pricing and other parts of the tax code," wrote Stark, as cited on Thursday (11/6/2026).
The Indonesia chapter was authored by two DDTC professionals: Tax Director of DDTC Consulting, Veronica Kusumawardani, and Tax Director of DDTC Consulting, Cindy Kikhonia Febby.
In their exposition, Veronica and Cindy write that Indonesia continues to strengthen its transfer pricing regime to bring it into ever-closer alignment with OECD standards and the Base Erosion and Profit Shifting (BEPS) agenda.
The authors emphasise that transfer pricing documentation will become increasingly important, as it constitutes the primary basis for the Directorate General of Taxes (DGT) in conducting audits and testing compliance with the arm's length principle (ALP).
In addition, the DGT is now placing greater emphasis on transfer pricing policies designed from the outset (an ex ante approach), rather than merely examining transaction outcomes after the fact.
Audit Focus
In their paper, Veronica and Cindy observe that transfer pricing remains one of the primary focuses of tax audits in Indonesia. Audit risk is heightened for taxpayers that sustain recurring losses, conduct significant controlled transactions, make royalty or intra-group service payments, conduct business restructurings or transact with low-tax jurisdictions.
The authors also consider the transfer pricing audit environment in Indonesia to be fairly aggressive in countering potential tax avoidance by entrepreneurs. Accordingly, taxpayers must be prepared to explain and demonstrate that their business practices comply with the arm's length principle in order to mitigate the risk of disputes escalating to the tax court.
According to Lexology In-Depth: Transfer Pricing Edition 10, robust documentation constitutes one of the key instruments for withstanding an audit and mitigating the risk of disputes with tax authorities.
Although transfer pricing audits remain intensive, the authors also note that Indonesia is increasingly strengthening dispute-prevention instruments through APAs and mutual agreement procedures (MAPs). This development reflects efforts to enhance legal certainty for taxpayers whilst reducing the risk of double taxation.
Further, in assessing controlled transactions, the DGT is placing increasing emphasis on economic substance, including functional analysis, assets and risks. This approach is particularly evident in the testing of intangible asset transactions through the DEMPE concept.
"Although the regulatory framework is maturing, the potential for disputes remains high due to differences in interpretation between taxpayers and tax authorities regarding transfer pricing methods, the selection of comparables and the characterisation of transactions," wrote Veronica and Cindy in this report. (sap)
