Intra-group financial transactions may include instruments by which risk is transferred within the MNE group. For example, hedging arrangements are frequently used, in the ordinary course of business, as a means of mitigating exposure to risks such as foreign exchange or commodity price movements. An independent entity may decide to assume such risks or hedge against them according to its own policies. However, in an MNE group, such risks might be treated differently depending on the MNE group’s approach to risk management and hedging ... Read more

PT Hino Motors Manufacturing Indonesia is a subsidiary of a Chinese Group in the automotive industry. Following an audit, the tax authorities issued an assessment for FY 2015 where the benchmark that had been used to determine the income of PT Hino Motors was dismissed and replaced with another. According to the tax authorities Hino Motors had not been subjected to the same economic conditions as the comparables in benchmark provided by the company The Company disagreed and brought the case to the Tax Court where, in a decision issued 11 November 2020, the court set aside the assessment. An appeal was then filed by the tax authorities with the Supreme Court. Judgement of the Supreme Court The Supreme Court ruled in favor of PT Hino Motors and upheld the decision of the Tax Court to set aside the assessment. Excerpts “(…) – That the correction of Corporate Income Tax for Fiscal Year 2015 with a positive correction on the ... Read more