The Arm’s Length Principle

This article has been published in 6th Edition of Gagas Pajak Magazine  PrefaceThe term arm's length principle (ALP) is closely related to our understanding of transfer pricing, related party or associated enterprises, and tax avoidance. All these terms can be found in Article 18 paragraph (3) Indonesian Income Tax Law which is one of our anti tax avoidance rule.The provision affirms that the Director General of Taxes is authorized to re-determine income and expenses as well as determine taxpayer debt as capital to calculate the taxable income for taxpayers who have affiliation with any other taxpayer in accordance with ALP which are not influenced by a related or associated parties relation with using the comparable uncontrolled price method, the resale price method, the cost-plus...

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Indonesia - US Tax Treaty

CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDONESIA AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA (As Amended by 1996 Protocol)FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME Article 1 PERSONAL SCOPEThis Convention is applicable to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1. The existing taxes which are the subject of this Convention are: (a) In the case of Indonesia:the income tax (pajak penghasilan 1984), and to the extent provided in such income tax, the company tax (pajak perseroan 1925), and the tax on interest dividends, and royalties (pajak atas bunga, dividen dan royalty 1970). (b) ...

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