COST ACCOUNTING
TRANSFER PRICING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Taxpayers who carry out affiliated transactions are required to prepare Transfer Pricing Documents based on PMK-213/PMK.03/2016
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Taxpayers who carry out affiliated transactions both required and not required to make Transfer Pricing Documents based on PMK-213/PMK.03/2016
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Taxpayers who carry out affiliated transactions that are not required to make Transfer Pricing Documents based on PMK-213/PMK.03/2016
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Taxpayers who carry out independent transactions based on PMK-213/PMK.03/2016
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Detailed explanation-1: -The basis of transfer pricing is the Arm’s Length Principle, as it is known internationally. This principle states that the price agreed in a transaction between two related parties must be the same as the price agreed in a comparable transaction between two unrelated parties.
Detailed explanation-2: -The arm’s length principle is a way of ensuring that organizations with multiple legal entities in different jurisdictions are tax-compliant and do not profit unfairly (accidentally or intentionally) from transacting between its related entities.
Detailed explanation-3: -At the foundation of transfer pricing is the arm’s length principle, which states that the price charged in a controlled transaction between two related parties should be the same as that in a transaction between two unrelated parties on the open market.