Four Measures for Transfer Pricing Risks Mitigation in 2026 

Dynamics and turbulence are indifferent to good or bad timing. We had just celebrated the turn of the year with joy and optimism, when new upheavals and challenges had already emerged. 

A week after the New Year’s trumpets filled the air and fireworks lit up the sky, the business community had to return to a state of alert. A United States military operation captured Venezuelan President Nicolas Maduro, sparking widespread speculation among business players. 

As a result, global oil prices fell sharply due to heightened uncertainty. This is expected to affect the price movement across other commodities. Consequently, global economic growth will also be impacted. 

Meanwhile, the trade war between the United States and China remains heated. Likewise, the Russia-Ukraine geopolitical conflict continues to influence the global economic situation. 

Transfer Pricing Challenges 

For corporations, especially multinational enterprises, the priority is to remain vigilant against these dynamics. Multinational enterprises in Indonesia are no exception. 

The impact is related to corporate policies on planning and managing related-party transactions. Especially for companies whose accounting period runs from January to December, the beginning of the year is a crucial period. 

Referring to Article 17 paragraph (1) of Minister of Finance Regulation (PMK) Number 172 Year 2023, a transfer pricing analysis must be conducted at the time the related-party transaction is carried out. This analytical approach is commonly known as the ex-ante approach. In this regard, companies having related-party transactions must pay attention to the following matters. 

1.  Revisit related-party transactions in 2026  

For most multinational companies, mapping related-party transactions for the year ahead should not be difficult, given that such transactions are generally routine for multinational companies. 

Examples of recurring related-party transactions include purchases, sales, royalties, services, and interest on loans. 

2.  Identify the appropriate transfer pricing method 

The identification of the transfer pricing method can be carried out by reviewing the conditions and analytical direction applied in 2025. This measure is taken in order to ensure consistency. 

Accordingly, companies may use the 2025 method as the basis for the 2026 analysis. However, companies must still take into account the actual conditions that may occur in 2026. 

In essence, whichever method is used to determine transfer prices must be aligned with the actual conditions of the related-party transactions undertaken. 

3.  Determine comparables at the beginning of 2026  

Companies should pay close attention to the availability dates of the comparable data before conducting a transfer pricing analysis. If comparables are obtained from databases, the data extraction date must be considered. 

However, if the company applies a transaction-by-transaction analysis, internal comparables must be available at the time the analysis is conducted, namely prior to the date the related-party transaction takes place. In addition, companies should ensure that the benchmarking analysis is carried out at the beginning of the accounting year. 

4.  Project the analysis results 

Companies should also project the benchmarking analysis results against the pricing policies of the related-party transactions that will be conducted.      

Carrying out the aforementioned measures at the beginning of the year is essential. This way, companies can ensure compliance with the transfer pricing analysis obligations stipulated in PMK 172/2023. 

Moreover, the tax authority is very likely to conduct reviews and examinations to assess whether taxpayers have prepared the transfer pricing documentation in accordance with the timeline mandated by PMK 172/2023. 

Transfer Pricing Adjustment Risks 

In practice, we often encounter companies lacking sensitivity to these provisions. As a result, their transfer pricing documentation is deemed not to comply with the ex-ante principle from a timeline perspective. 

Under such situation, the tax authority has the ground to determine the arm’s length prices for the related-party transactions conducted by the taxpayer. Generally, the tax authority will raise the following questions, among others: 

1. When was the transfer pricing documentation completed? 
2. When was the benchmarking analysis conducted? 
3. When did the taxpayer extract the comparable data from the database? 

If the transfer pricing documentation was prepared by an external party (consultant), on what date was the engagement agreement signed? 

What is the date of the tax withholding slip for the payment of transfer pricing documentation services? Were the service fees paid in installments? 

These questions are critical because, if the tax authority concludes that the taxpayer failed to meet the ex-ante requirement from a timeline perspective, the substance of the analysis set out in the transfer pricing documentation will be disregarded. Subsequently, the tax authority will make transfer pricing adjustments based on their own analysis. 

We hope this article helps you mitigate the risk of transfer pricing adjustments in fiscal year 2026. May we face the turmoil and dynamics ahead with better planning. Happy New Year 2026! 

Disclaimer! This article is a personal opinion and does not reflect the policies of the institution where the author works.