Multinational transfer pricing of intangible assets: Indonesian tax auditors’ perspectives

Abstract

Purpose The purpose of this paper is to examine the challenges faced by Indonesian tax auditors in auditing multinational transfer prices of intangible assets. This study then explores the suitability of mechanisms currently used by Indonesian tax auditors to ensure appropriate tax audit adjustments. Design/methodology/approach The authors use a qualitative research method involving semi-structured and open-ended interviews with the tax auditors in Indonesia. The authors also include some Indonesia court decisions pertinent to the research question above. Findings Findings indicate that Indonesian tax auditors face a number of difficulties during the audit of transfer pricing cases derived from intangible property, including a lack of transparency in taxpayers’ bookkeeping; limited taxpayer cooperation in providing data and documents; transfer pricing regulations; and problems related to organization and human resources. The study also finds that Indonesian tax auditors and tax officials handle transfer pricing cases by using a legal basis as reference and by performing a number of activities, including among others, comparable analysis. Originality/value The findings of this study should assist policy makers to improve the quality of transfer pricing audit. Also, tax auditors and account representatives who do not have enough experience in auditing transfer pricing cases derived from intangible property rights might use the outcomes of this study as a guide for dealing with those cases.

Income Shifting Dan Pemanfaatan Negara Tax Haven

“…Hasil penelitian ini mendukung penelitian Deanti (2017), dan penelitian Muhammadi et al (2016). Rendahnya transparansi terkait transfer intangible property untuk perusahaan multinasional serta kurang konsistennya peraturan terkait transfer pricing menjadi kekurangan terkait sistem perpajakan di Indonesia (Muhammadi et al 2016). Penilaian dari intangible assets menjadi masalah utama karena keunikan dan komponen immaterial dimana tidak ada pasar aktif yang mendukung untuk transaksi intangible assets (Visconti, 2012).…”

Transfer Pricing Aggressiveness and Corporate Governance: Indonesia’s Evidence

“…Studies on the challenges of tax inspectors in Indonesia that examine the transfer pricing of intangible assets performed by multinational companies in Indonesia show that tax inspectors in Indonesia have difficulty in checking the transfer pricing transactions (Muhammadi, 2016). The difficulty proving that companies engage in the practice of transfer pricing make it hard for the government to predict the losses caused by the practice of transfer pricing.…”

Balkanlarda Transfer Fiyatlaması

“…While others (Bhattacharjee and Moreno, 2017) tried to analyze opponents emotions as information signals during accounting bargaining by benefiting from psychological research measures. Several studies have analyzed the subject utilizing surveys (Hummel et al, 2017), case studies (Ylönen et al, 2015) and accounts (Muhammadi et al, 2016).…”