ARTICLE 7 – BUSINESS PROFIT

SOAL I
Manufacturer Ltd is resident of US has a branch in Indonesia. The branch pays a charge to the head office
following the items:

a. Interest at 10% on a “loan” of part of branch’s capital by head office;

b. Manufactures has total external interest costs of USD 5,000,000 and it allocates in its financial
accounts in accordance with US tax law a pro rata share of USD 500,000 of this interest to the
branch in Indonesia based on worldwide operations
c. USD 10 per item as cost of goods sold (COGS). Cost manufacture on an absorption cost basis at
head office being USD 7.50
Please explain tax treatment on the above transactions!

SOAL II

Manufacturer Inc is incorporated and managed in the Utopia. It wishes to sell its products in
Australis. Manufacturer appoints Boris as its agent in Australis. Previously he has worked as an agent
for various foreign companies but he intends in future to spend all his time on Manufacturer’s
business. Boris solicits orders from customers and forwards them by fax to the head office of
Manufacturer with a recommendation for action. The clerical assistant of the sales manager in head
office has instructions to follow all recommendations of Boris. Orders are filled by shipment direct
from head office to the person who makes the orders. Does Manufacturers have a permanent
establishment in Australis?
Jawab

SOAL I

a. Internal Interest (Article 7 Paragraph 3 OECD Model)

Bunga atas pinjaman yang diberikan oleh head office kepada branch dapat dibiayakan hanya untuk
lembaga keuangan/bank. Sedangkan bila Manufacturer Ltd bergerak di bidang selain lembaga
keuangan/bank, bunga atas pinjaman antara head office kepada branch tidak dapat dibiayakan.

b. External Interest (Article 7 Paragraph 3 OECD Model)

Pro-rata alokasi bunga atas pinjaman head office kepada pihak eksternal dapat diakui selama
pinjaman tersebut seluruhnya atau sebagian bermanfaat bagi Bentuk Usaha Tetap (“BUT”).
Permasalahan yang muncul adalah bagaimana mengalokasikan biaya bunga tersebut kepada BUT
tersebut. Umumnya negara-negara tergabung dalam OECD cenderung untuk mengalokasikan biaya
bunga berdasarkan capital structure antara head office dengan BUT (lihat lampiran OECD Revised
Commentary paragraph 39-44).

c. COGS (Article 7 Paragraph 2 OECD Model)

Berdasarkan ketentuan di dalam Article 7 Paragraph 2, alokasi keuntungan harus didasarkan
dengan asumsi bahwa head office dan BUT merupakan separate entity. Report on the Attribution of
Profits to Permanent Establishments, Part I: General Consideration, Paragraph 220 menyebutkan:
“Consider a PE that distributes a product manufactured by its head office. Assume for
this purpose that the PE should be deemed to have purchased the product from the head
office for on-sale to third parties. It is understood that the third party sales price is at
arm’s length and so the transfer pricing examination would be focused on the dealings
with the head office. To determine the PE’s attributable profit from these dealings, the
transfer pricing methods would be applied in light of the PE’s business activities and
functions as a distributor. If, for example, the head office also sells the product to third
party distributors operating in circumstances comparable to those of the PE, the CUP
method might be used to determine the price at which the PE would have obtained the
products had it been a “distinct and separate enterprise” within the meaning of paragraph
2 of Article 7. The amount of gross profit attributed to the PE would be determined as the
difference between revenues from third party customer sales attributed to the PE and the
price notionally charged by the head office, adjusted, if necessary, to the arm’s length
price by reference to comparable transactions between third party distributors and
manufacturers”
Berdasarkan ketentuan di atas, penjualan barang dagang dari manufacturers kepada BUT harus dilakukan
secara arm’s length. Bila misalkan Manufacturers Ltd menjual barang kepada pihak lain dengan COGS
sebesar USD 9. Oleh karenanya, COGS BUT seharusnya seharga sebesar USD 9.

SOAL II
Berdasarkan ketentuan di Commentary OECD atas Article 5 Paragraph 5 OECD Model, keberadaan
dependent agent di suatu Negara dapat dianggap sebagai BUT. Sebagaimana tercantum pada kasus di
atas, Boris berkeinginan untuk fokus menjual barang produk Manufacturer. Hal ini menunjukkan
ketergantungan secara ekonomis yang dapat menempatkan Boris sebagai dependent agent. Lebih lanjut,
kewenangan menandatangani kontrak atas nama Manufacturer dapat menimbulkan BUT (dependent
agent) sebagaimana dikutip dari Article 5 Paragraph 5 OECD Model berikut ini:
“Notwithstanding the provisions of paragraphs 1 and 2, where a person — other than an
agent of an independent status to whom paragraph 6 applies — is acting on behalf of an
enterprise and has, and habitually exercises, in a Contracting State an authority to
conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a
permanent establishment in that State in respect of any activities which that person
undertakes for the enterprise, unless the activities of such person are limited to those
mentioned in paragraph 4 which, if exercised through a fixed place of business, would not
make this fixed place of business a permanent establishment under the provisions of that
paragraph”.