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TP Docs Series_1

08 Sep 2017

TP Docs Series

Related Party Issues

Ideally, every single business transaction should be reviewed by 3 points of views, i.e. tax, accounting and legal.

During preparing of TP Docs, we found there were different definitions about ‘related party’ / affiliated transactions between tax, legal and accounting (auditor) side.

Accounting Principle (PSAK 7 2015 revision) and ruling for Capital Market have a very broad definition of ‘Related Part’ comparing to Tax Laws (Income Tax and VAT Laws).

In reality, we found the fact that, even the tested party is owned by less than 25% by one of parent companies, accounting principle and legal for the capital market, categorize the transactions done by both parties as ’related party’ ones, even there is no control by parent company and its affiliated directly and indirectly.

Circular letter SE-50 year 2013 mentioned, if a tax officer could not find the related party, they can check in the disclosures of audit reports!!! The above fact can be a potential problem!!! Tax officers can consider it as related party even the ownership is less than 25% and no control issue.

Need a wiser action to clarify this problem in the TP Docs in order to avoid misunderstanding of the related party interpretation.


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

0816 825 348

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