A Comprehensive Guide to CbCR (Country-by-Country Report) Obligations Under PMK 172 of 2023: Requirements, Schedules, and Case Studies

In the three-tiered approach to Transfer Pricing documentation, the Country-by-Country Report (CbCR) plays a vital role as a global tax transparency tool. Unlike the Master File and Local File, which focus on transactional analysis, the CbCR provides a map of the global allocation of income, taxes, and economic activities of a business group.

The following is a thorough breakdown of CbCR regulations in Indonesia based on PMK 172/2023, along with calculation case studies.

Who is Obligated to Submit the CbCR?

PMK 172/2023 categorizes CbCR obligations into two main types: obligations for the Parent Entity and obligations for Constituent Entities (Local Filing).

A. Primary Filing Obligation

A domestic taxpayer acting as the Parent Entity of a Business Group is required to prepare and maintain a CbCR if:

• They have a Consolidated Gross Revenue in the Tax Year prior to the reported Tax Year of at least IDR 11,000,000,000,000.00 (eleven trillion rupiah).
• Parent Entity Criteria: An entity that consolidates the group's financial statements, or would be required to consolidate if its shares were traded on a stock exchange, and is not owned by any other constituent entity within the group.

B. Secondary Filing Obligation (Local Filing)

A domestic taxpayer that is not a Parent Entity (only a group member/constituent entity) is required to submit a CbCR if their Parent Entity is located abroad and meets one of the following conditions:

• The Parent Entity's country of domicile does not require CbCR submission;
• The Parent Entity's country of domicile does not have a tax information exchange agreement with Indonesia; or
• An agreement exists, but there is a failure to exchange information (the CbCR cannot be obtained by the Indonesian Government from that country).

Content and Format of the CbCR

Based on Article 31 of PMK 172/2023, the CbCR consists of three main parts that must be reported using the XML (Extensible Markup Language) format:

• Form CBC-1 (Allocation of Income & Taxes): Contains aggregate data per country/jurisdiction regarding: Gross Revenue (Affiliated & Independent), Profit/Loss Before Tax, Income Tax Withheld/Collected/Self-Paid, Income Tax Payable, Capital, Accumulated Retained Earnings, Number of Permanent Employees, and Tangible Assets (other than cash).
• Form CBC-2 (List of Entities & Business Activities): Contains a list of all business group members per country and their primary types of business activities (e.g., R&D, Manufacturing, Sales, Services, etc.).
• Form CBC-3 (Additional Information): Provides further explanations deemed necessary to understand the data in CBC-1 and CBC-2.

Taxpayers are also required to prepare a CbCR Working Paper before compiling the final report.

Availability and Reporting Timeline

Unlike the Master File and Local File, the CbCR has a more flexible preparation schedule but a stricter reporting mechanism.

• Availability Deadline: The CbCR must be available no later than 12 (twelve) months after the end of the Tax Year.
• Reporting Timeline: Taxpayers must submit the CbCR along with a Notification to the DGT (Directorate General of Taxes) via the Taxpayer Portal (DJP Online) no later than 12 months after the end of the Tax Year.
• Tax Return Attachment: The receipt of CbCR submission obtained from the DGT system must be attached to the Corporate Income Tax Return (SPT) for the following Tax Year.

Example: The CbCR for Tax Year 2023 must be submitted by December 31, 2024. The receipt is then attached to the 2024 Corporate Income Tax Return (reported in April 2025).

Case Study: CbCR Obligation Calculation

The following is an illustration of the CbCR threshold application as stated in Appendix Letter A, Point 3 of PMK 172/2023:

PT GHI is an Indonesian company and the Parent Entity of a Business Group. PT GHI's fiscal year runs from January 1 to December 31.

Obligation Analysis:

• For 2019 CbCR: Look at the consolidated revenue of the previous year (2018). The 2018 value = IDR 12 Trillion (> IDR 11 Trillion). Conclusion: PT GHI IS OBLIGATED to prepare the 2019 CbCR (Deadline: Dec 31, 2020).
• For 2020 CbCR: Look at the revenue of the previous year (2019). The 2019 value = IDR 10 Trillion (< IDR 11 Trillion). Conclusion: PT GHI IS NOT OBLIGATED to prepare the 2020 CbCR.
• For 2021 CbCR: Look at the revenue of the previous year (2020). The 2020 value = IDR 13 Trillion (> IDR 11 Trillion). Conclusion: PT GHI IS OBLIGATED to prepare the 2021 CbCR (Deadline: Dec 31, 2022).

CbCR Notification

All domestic corporate taxpayers who are members of a Business Group (both Parent and Subsidiaries) MUST submit a Notification to the DGT via the Coretax account. This notification informs the DGT which entity in the group is responsible for submitting the CbCR.

Key Summary

The CbCR obligation is ex-ante, based on the previous year's data. For Parent Entities in Indonesia, the key is monitoring whether the previous year's Consolidated Gross Revenue exceeds IDR 11 Trillion. For subsidiaries (Constituent Entities), the primary obligation is submitting the Notification; however, this may escalate to a full CbCR filing (Local Filing) if the foreign Parent cannot exchange reports with Indonesia.

Reference

Ministry of Finance of the Republic of Indonesia. (2023). Minister of Finance Regulation Number 172 of 2023 regarding the Application of the Arm's Length Principle in Transactions Influenced by Special Relationships.