DETERMINE THE MOST APPROPRIATE TRANSFER PRICING METHOD FOR PT RISTI BERKAH NUSANTARA TO OPTIMIZE FINANCIAL PERFORMANCE WITH REGULATORY COMPLIANCE

• Main Author: Albar Tanjung, Ardial
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/35728
• Institution: Institut Teknologi Bandung

Transfer pricing is part of the company’s strategy to maximize profits by transferring goods or services between business units or affiliated companies. Sometimes multinational companies use transfer pricing to reduce tax burden because of the different tax rates in different countries. The Directorate General of Taxation (DGT) pays attention to related party transactions in multinational company. DGT assesses arm’s length principle and issues the relevant regulations. In line with the Organization for Economic Co-operation and Development (OECD) Transfer Pricing Guideline established in 2010, the DGT issues five methods to assess arm’s length principle of related party transaction, that are Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), and Transactional Net Margin Method (TNMM). PT Risti Berkah Nusantara Tbk as a part of the global Risti Berkah Group, conducted related party transactions in 2017, sales of goods, purchase of goods, service payments, and royalty payments. Based on transfer pricing analysis, it was found that TNMM is the appropriate method to assess the arm’s length principle of sales of goods, purchase of goods, service payments, and CUP is the proper method to assess the arm’s length principle for royalty payment. With proven that related party transactions are carried out within arm’s length range, it is expected that in the future there will be no more correction from the tax party. Furthermore, PT RBN is also advised to renegotiate royalty rates so that it can increase company profits.