Joint DGT-OECD Capacity Building on Transfer Pricing 2023

The Directorate General of Taxes (DGT), in collaboration with the Organization for Economic Cooperation and Development (OECD) and with the support of the French Development Agency (AFD), recently held a capacity building on transfer pricing at the Head Office of the Directorate General of Taxes in Jakarta on the 27th Floor Hall. This event lasted four days, from July 24 to July 27, 2023. This annual event is a collaboration between the DGT and the OECD. Melinda Brown (OECD), Dominic Vines (HMRC, United Kingdom), Antony Clark (HMRC, United Kingdom), David Duquesne (DGFiP, France), Biljana Marion (DGFiP, France), and Grant Leader (ATO, Australia) were among the OECD and tax authority experts who spoke at this year’s event.

Mrs. Dwi Astuti, Director of Tax Dissemination, Services, and Public Relations, opened the event on behalf of Mr. Mekar Satria Utama, Director of International Taxation. Mrs. Dwi Astuti stated on this occasion that transfer pricing has always been crucial in the field of taxation. She also stressed that transfer pricing has become one of the DGT's strategic initiatives for the years 2022–2024, with the goal of optimizing transfer pricing dispute avoidance, accelerating transfer pricing dispute settlement, and eventually optimizing tax compliance and tax revenues.

According to Melinda Brown (OECD), Indonesia has developed a transfer pricing strategy over time. The development itself is great because Indonesia already has a separate unit to handle transfer pricing. Melinda Brown's statement itself cannot be separated from Indonesia's role as a member of the G20 and is also part of the OECD's BEPS Inclusive Framework, which has a commitment to actively comply with applicable international tax regulations and adopt them into domestic tax regulations, especially in terms of transfer pricing regulations. This capacity building is important because it raises awareness and builds knowledge and skills in terms of transfer pricing for DGT employees and other related parties.

This event was attended by around 157 participants, who were representatives from regional tax offices throughout Indonesia, tax offices under the Large Taxpayers Regional Tax Office, and the Jakarta Special Regional Tax Office, as well as representatives from several directorates at the Head Office of DGT. Apart from internal DGT, this capacity building was also attended by representatives from the Tax Court and the Tax Education and Training Center.

Various materials presented during the holding of this event began with the material management of transfer pricing. In this session, each resource person shared their experiences on how to handle transfer pricing by their institutions and the policies implemented in the UK, Australia, and France. Then, it continued with the general overview of transfer pricing presented by David Duquesne from DGFIP, France. Antony Clark and Dominic Vines, who were resource persons from HMRC in the United Kingdom, explained transfer pricing on financial transactions. In this presentation, Anthony explains loans, guarantees, cash pooling, and transfer pricing risks in financial transactions.

On the third day, there was a discussion about transfer pricing on intragroup services delivered by Melinda Brown (OECD). In her presentation, Melinda explained that in intra-group service transactions, there are two main issues that need to be considered: whether the intra-group services are actually provided and whether the price paid for these services has complied with the arm's length principles. Melinda also explained low-value-adding services in her session.

On the last day, there is a case clinic session. Analysts from the Sub-Directorate of Dispute Prevention and Settlement of International Taxation, Directorate of International Taxation, presented three cases of transfer pricing. To protect the confidentiality of taxpayer data, the entity name, location, and identity data associated with the case were previously changed and disguised. The resource person provided thoughts and feedback on these transfer pricing cases. It's quite interesting because it's structured like a discussion, and all participants can contribute and ask questions. The last day's material was concluded with a presentation by David Duquesne and Bijlana Marion from DGFIP, France. They explained that France has issued new rules regarding the taxation of influencers' activities since June 9, 2023. In addition, GAFA Tax, which is a digital service tax that has been issued by France since July 2019, has provided very significant tax revenue to France in the period 2020–2022. However, if Pillar 2 becomes effective later, France is committed to ending the rules related to the GAFA tax.

Overall, the event went really well and smoothly. Throughout the event, participants with work histories intimately related to the area of transfer pricing actively asked the experts questions about transfer pricing issues they faced in their offices, making the theory and information obtained more implementable. Aside from that, this capacity-building event is also a sharing session, which might bring new insights for all attendees. The hard work of the Directorate of International Taxation as the organizing committee is essential to the success of this event. The goal is that such events will continue to occur in the future since they will be highly beneficial for the development of the Directorate General of Taxes and Indonesia.

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