Transfer pricing rules ensure that related-party transactions are priced as they would be between independent parties. The documentation should tell a coherent story, not just provide a benchmark result.
The three-tiered approach
Indonesia generally follows the OECD-style documentation structure: master file, local file, and country-by-country reporting for qualifying groups.
What good documentation explains
- The group and local business profile
- The controlled transactions and contracts
- The functional, asset, and risk profile
- The selected transfer pricing method
- The comparable companies or transactions used
Strong documentation is prepared contemporaneously and supported by evidence from the business, not assembled after an audit notice arrives.
