This case concerns transfer pricing corrections relating to PT Pacific Palmindo Industri’s sales of commodity products to related parties. The tax authority used the Comparable Uncontrolled Price method with Malaysian Palm Oil Board market quotations to benchmark prices, noting that the taxpayer’s own transfer pricing documentation treated MPOB as an accepted market reference.
Procedurally, the company sought a review by the Supreme Court of a Tax Court decision that had partly granted its appeal, but had upheld a business turnover correction of IDR 97,604,389,232. This resulted in income tax still being due of IDR 36,495,507,220.
Judgment
The Supreme Court held that the reasoning of the Tax Court was correct, adopted its legal considerations and rejected the review.
The Court ruled that both the CUP method and the transactional net margin method are acceptable when they produce results that are consistent with the arm’s length principle. The court also found that the tax authority’s CUP-based comparability analysis was accurate for 2013.
The taxpayer was ordered to pay review costs of IDR 2,500,000. Decision date: 25 May 2023.
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