DG Tax perfected Transfer Pricing

JAKARTA. The case of the alleged transfer pricing PT Asian Agri is a scene some time ago helped push the Directorate General (DG) of Taxation Ministry of Finance tidying resolve transfer pricing.

In simple terms, transfer pricing is a tax avoidance tricks performed by companies engaged in transactions with affiliated companies in foreign countries who do not wear fair price. As a result, income or profit companies looking thin and end up paying income taxes (income tax) is smaller than it should.

One, the government's efforts to prevent transfer pricing is to add the authority of the Directorate General of Taxation to correct the mutual agreement between the taxpayer of the Interior (WDPN) with their counterparts abroad. Correction done when there are indications of untruth information or documentation submitted by WPDN Indonesia and their partners.
These provisions set out in Article 19 of Regulation No. DGT Per-48/PJ/2010 Concerning the Implementation of the Joint Approval Procedure (Mutual Agreement Procedure) Based on Avoidance of Double Taxation (P3B). Beleid effective from 3 November 2010.

P3B is the agreement between Indonesian Government and the state government or jurisdiction partners to prevent the occurrence of double taxation and tax evasion.

Director of Counseling, Services, and Public Relations Directorate General of Taxation Iqbal Alamsjah hope with all provisions of these rules relates P3B and done thoroughly by the Directorate General of Taxation. "And also is expected to increase tax revenue, because of the possibility of correction of tax on transfer pricing practices that had happened," he said, Wednesday (10/11).

However, tax analysts said Dani Septiadi new rules to prevent transfer pricing is not necessarily able to increase tax revenue. It depends on the method and quality of later corrections made Directorate General of Taxation. "If the tax there was a correction method was less precise Directorate General of Taxes, then they do not want to do the coresponding Adjustment," he explained
Source: Harian Kontan, 11 November 2010