Evaluation of Capacity Adjustments for Transfer Pricing Disputes: A Case Study of Tax Court Decisions

DOI

10.2991/aebmr.k.220602.026How to use a DOI?

Keywords

transfer pricing; capacity adjustment; tax dispute

Abstract

This study evaluates the implementation of capacity adjustment using the transactional net margin method (TNMM) on two appeal decisions of transfer pricing dispute based on the tax consultant’s point of view. Capacity adjustment is one of the techniques described in the OECD transfer pricing guidelines (OECD TPG) for transfer pricing analysis of companies that have not yet reached their optimal production capacity. However, in practice there are differences in interpretation between the Indonesian tax authorities and the OECD TPG. The study uses a qualitative approach which consists of document analysis of the two appeal decisions and semi-structured interviews. Based on the results of the study, the implementation of capacity adjustment requires rational commercial reasons and the basis for proper calculations.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article distributed under the CC BY-NC 4.0 license.

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TY  - CONF
AU  - Zulhanief Matsani
AU  - Abdul Haris Muhammadi
PY  - 2022
DA  - 2022/06/13
TI  - Evaluation of Capacity Adjustments for Transfer Pricing Disputes: A Case Study of Tax Court Decisions
BT  - Proceedings of the International Conference on Economics and Business Studies (ICOEBS 2022)
PB  - Atlantis Press
SP  - 205
EP  - 210
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220602.026
DO  - 10.2991/aebmr.k.220602.026
ID  - Matsani2022
ER  -