COMPARABILITY ANALYSIS OF COMPANIES THAT CONDUCT INTRA-GROUP TRANSACTIONS (STUDY CASE: PT PLANT PIPE MANUFACTURING)
PT Plant Pipe Manufacturing, an Indonesian multinational enterprise (MNE), manufactures steel pipes for agricultural purposes. As an MNE, the Company engages in cross-border business activities with its subsidiaries and affiliates due to globalization and a desire for more efficient operations; th...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/77809 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | PT Plant Pipe Manufacturing, an Indonesian multinational enterprise (MNE), manufactures steel pipes for agricultural purposes. As an MNE, the Company engages in cross-border business activities with its subsidiaries and affiliates due to globalization and a desire for more efficient operations; this strategy is known as transfer pricing. However, based on an audited financial report, the study reveals a decline in sales and operating profit from 2018 to 2022, with a significant portion of sales attributed to related parties in Japan. To comply with tax regulations, the Company must adhere to the arm’s length principle and submit Transfer Pricing Documentation, ensuring that intra-group transactions do not result in profit shifting or loss conditions. The comparability analysis using TNMM (Transactional Net Margin Method) highlights that the Company's ROTC (Return on Total Cost) falls below the range observed in comparable independent companies. Adjusting the production capacity raises the ROTC values, indicating that the Company's profitability level under normal conditions exceeds the industry average and does not adversely impact Indonesian taxation regarding transfer pricing policies.
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