Technical Guide: How to Fill Out the Summary of Master File and Local File in the Annual Tax Return

One of the significant changes in Transfer Pricing (TP) administration in Indonesia is the formal obligation to attach the Summary of Master File and Local File at the time of submitting the Corporate Income Tax Annual Return. This document is not merely a formality, but a legal statement from the Taxpayer that they have organized TP Documentation (TP Doc) in a timely manner.

Basis of Obligation and Deadline

Before filling it out, ensure that you are indeed required to create a TP Doc. Based on Article 16 paragraphs (2) and (3) of PMK 172/2023, Taxpayers are required to organize a Master File and Local File if they met one of the criteria last year, such as gross turnover > Rp50 Billion or affiliated goods transactions > Rp20 Billion.

If you are required to create a TP Doc, then you are required to create a Summary and attach it to the Corporate Income Tax Annual Return for the relevant tax year.

Structure of the Summary Form

The Summary Form consists of four main parts. Here is how to fill it out based on Attachment Letter B of PMK 172/2023:

Part A: Identity and Tax Year

At the top of the form, fill in the basic administrative data:

• Tax Year: Fill with the company's book year digits (e.g., 2023).
• NPWP: Fill with the company's Taxpayer Identification Number.
• Taxpayer Name: Fill with the full company name according to the NPWP card.

Part I: Summary of Master File

This part is a checklist (checklist) stating that your Master File contains the mandatory standard information. You must place a check mark (✓) in the box available for each of the following points:

• [ ] Ownership Structure and Chart of the Business Group: Including the country/jurisdiction of each member.
• [ ] Group Business Activities: Explanation regarding business profit drivers, supply chain of main products/services, and main geographic markets.
• [ ] Intangible Property (IP): Group strategy regarding IP, list of important IP, and TP policies regarding IP.
• [ ] Financial and Financing Activities: Explanation of group financing and entities performing financial center functions (treasury center).
• [ ] Consolidated Financial Statements: Consolidated financial statements of the parent entity and tax information regarding affiliated transactions (such as APAs possessed by the group).

Part II: Summary of Local File

Just like Part I, this is a checklist for the Local File. You are required to check (✓) the following boxes:

• [ ] Identity and Business Activities of Taxpayer: Management structure, organizational chart, and local business strategy.
• [ ] Information on Affiliated and Independent Transactions: Transaction details, transaction schemes, and transaction counterparties.
• [ ] Application of the Principle of Fairness and Business Prevalence (PKKU): Comparability analysis, TP method selection, and fair price determination (including benchmarking).
• [ ] Taxpayer Financial Information: Audited financial statements (if any) and segmented financial statements.
• [ ] Non-Financial Events: Non-financial events/facts affecting price formation (e.g., restructuring or government policies).

Part III: Statement of Organization and Availability

This is the most critical part. You are asked to fill in the statement: "That we have organized the master file and local file based on data and information available at the time the Affiliated Transaction was carried out...".

You must fill in two specific dates:

• Date Master File available: (dd/mm/yyyy)
• Date Local File available: (dd/mm/yyyy)

Strategy for Filling in Dates:

The dates filled in here must indicate that the documents were available no later than 4 months after the end of the tax year.

If you fill in a date outside that time limit (e.g., June 1, 2024), you indirectly admit that your TP Doc is late ("not available on time"). This risks making your TP Doc considered as not meeting formal provisions, so the DGT is authorized to determine tax ex officio without considering the analysis in your TP Doc.

Closing Section (Signature)

The form must be signed by the company management or Taxpayer's proxy, complete with:

• Place and Date of Summary creation.
• Full Name and NPWP of Signatory.
• Signature and Company Stamp.

How to Report in Annual Tax Return

Currently, reporting of the Corporate Income Tax Annual Return is generally done through coretax. This Summary is usually not input directly into the electronic form of the Tax Return (Main), but uploaded as an attachment.

1. Prepare File: Scan the Summary that has been signed and wet-stamped into PDF format.
2. Upload: On the Tax Return reporting menu (coretax), go to the "Attachments" or "Other Documents" section. Upload the file in the column provided for "Summary of Master File and Local File".

Filling out the Summary of Master File and Local File is a vital bridge between TP compliance and Tax Return reporting. Ensure:

• The content of your TP Doc is complete (so all checklists are checked).
• The availability date listed does not exceed 4 months after book closing.
• The document is attached when reporting the Tax Return so that your Tax Return is considered complete.

References

Ministry of Finance of the Republic of Indonesia. (2023). Regulation of the Minister of Finance Number 172 of 2023 concerning the Application of the Principle of Fairness and Business Prevalence in Transactions Influenced by a Special Relationship.