Title: The Essence of Improving Honesty in Describing the Principle of Fairness in Transfer Pricing
Authors: Suparno
Affiliations : Masters Program in Accounting, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
This study aims to describe the reasons, processes, suitability, and recommendations for transfer pricing practices carried out by PT. Sura Indah Wood Industries and PT. X by applying the arm's length principles applicable in Indonesia. This study was conducted using a descriptive qualitative research method. The research approach used is a case study approach to be able to identify transfer pricing cases carried out by PT. Sura Indah Wood Industries and PT. X. In the data collection process, interviews and documentation were conducted. The analysis technique used is descriptive analysis and pattern matching based on empirical events with predicted patterns. The results of the study revealed that the reason for PT. Sura Indah Wood Industries and PT. X to carry out transfer pricing practices is due to pressure from the parent company to carry out efficiency and optimize company profits. The transfer pricing process carried out by both companies is the same, namely complying with the arm's length principles applicable in Indonesia in PMK No.213 / PMK.03 / 2016. The suitability of transfer pricing practices carried out by PT. Sura Indah Wood Industries and PT. X is quite appropriate, especially when based on the regulation of PMK No. 213 / PMK.03 / 2016, but both companies have not fulfilled the appeal contained in Law No. 36 of 2008 Article 18 to conduct an advance pricing agreement (APA) before carrying out transfer pricing practices. Due to the lack of clarity in regulations on transfer pricing practices in Indonesia, it has an impact on the large element of subjectivity in justifying violations in transfer pricing, so it is necessary to re-evaluate the regulations on transfer pricing to provide clarity and certainty.
Keywords: Transfer pricing, Arm's Length Principles, Honesty, and Justification
Sources: http://repository.unair.ac.id/97262/