Benefit Test Analysis on Intra-Group Services Transactions in Indonesia

Intra-group transaction of services between affiliated companies is one of the transactions that has a high transfer pricing risk. This research is motivated by a dispute between taxpayers and the tax authorities in Indonesia related to testing the economic benefits of intra-group service transactions. The benefit test is one of the requirements that must be met by the taxpayer in order to fulfill the arm's length principle. Taxpayers must prove the existence of economic benefits that can add value to the provision of these services. The purpose of this study is to analyze the quality of information of transfer pricing documentation related to the benefits of intra-group transaction services in order to meet the arm's length principle, and identify the ideal quality of information that should be presented in the document. The researcher conducted a content analysis of the summary of information related to the intra-group service benefit test in 147 taxpayer transfer pricing documentation for the period 2017 to 2019, by comparing them with the regulations in Indonesia. Furthermore, the researcher confirmed the findings of the content analysis to the Tax Authorities and Tax Consultants through the interview process. The results of this study indicate that most of documentation in this study does not explain in detail about testing the benefits of intra-group services.