| Update | Catenaccio Ala Tp Docs

For soccer mania, catenaccio is a familiar word in soccer game. Catenaccio or the chain is a tactical system in soccer with a strong emphasis on defence. In Italian, catenaccio means “door-bolt” / (‘grendel’ in bahasa) which implies a highly organized and effective backline defence focused on nullifying opponents’ attacks and preventing goal-scoring opportunities (source: https://en.m.wikipedia.org/wiki/catenaccio).

Per MOF No.213/PMK.03/2016, taxpayers that having affiliated transaction should be prepared Transfer Pricing Documentations (TP Docs). I have written the article on threshold for taxpayers who have the obligation to prepare TP Docs in my previous article (link: http://tax-legal.id/update/new-tax-regulation-on-transfer-pricing-issues/60).

Tax offices may ask the 2016 TP Docs after the period to file the Corporate Tax Return i.e. April 30, 2017. They can test and review (‘attack’) the logical reasoning and the supporting comparable data in the TP Docs.

In order to defense that affiliated transactions based on fair market independent value, the taxpayers should prepare:

1. Master File (as ‘Defenders’) who is the first line to defense.

Starting this year, tax office will study and review the organization, corporate structure, business activities, intangible assets, financial activities and report at business group level. Defenders are the most important players in the defense line, also the master file in the TP Docs.

2. Local File (as Midfielder) is the heart of strategy in ‘defensive and attacking’.

Local File has been known as the old version TP Docs before PMK 213 era. It’s related with the local/subsidiary company business activity. Also we have to compare the affiliated transactions with non affiliated transactions to prove they are arm’s length. Comparison data should be selected properly from the trusted data source. Missing good midfielders will give bad impacts to the whole member of the team and the game as well. Defensive, Attacking and playmaker is on the midfielder side.

3. Country By Country Report / CBCR (is like a modern Strikers also have to help to defense if any attack).

This is the information about country by country reports related with tax paid allocation, business activities per country, revenue, profit/loss, income tax, equity, retained earning, number of employees, tangible assets, etc

The above 3 reports, Master File, Local File and CBCR is part of Catenaccio in defending the affiliated transactions, as arm’s length price. One and anothers are strongly related and as a whole defensive strategy. TP Docs is an art like strategy in soccer. Soccer composition strategy can be 4-3-3, 4-4-2, WM, total football, tiki-taka or even 1-3-5-2, where a 'goalie' become as a sweeper. There is no a fixed formula how to prepare a good TP Docs.

TP Docs is not a science but an art!!

Best Regards,
Agung Tjahjady SH, CPA, MM, BKP
Registered Tax Consultant, Advocate

0816 825 348

BVD Oriana User

https://tax-legal.id/

Update

Catenaccio ala TP Docs

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