The Indonesian government is preparing a package of incentives to lure home foreign exchange (forex) owned by Indonesian individuals and corporations abroad, aiming to bolster the economy and stabilize the rupiah.

Market researchers believe that by closing loopholes for tax avoidance − particularly through transfer pricing − more forex will naturally flow back into the country, as opportunities to conceal funds diminish.

Harry Su, Managing Director of Research and Digital Production at Samuel Sekuritas Indonesia, said that curbing tax avoidance through stricter transfer pricing rules could yield significant benefits. These include improving the current account balance, raising state revenues, and strengthening forex reserves.

“A quick measure the Finance Minister could take is to issue a regulation requiring external auditors to conduct full audits of all company transfer pricing practices in order to receive an unqualified opinion, in line with international standards,” Harry told Katadata on Tuesday, September 30, 2025.

According to him, Indonesia’s lack of such mandatory audits has made it easier for companies to shift profits to Singapore. If the government enforced these audits, import values could decline while export values rise − without any change in trade volumes − leading to a healthier current account balance. Tax revenues would also improve, while forex reserves could see a notable increase.

“With improvements in all three, the overall stability of our economy will be much stronger,” he said.

Countermeasures

Indonesia has already introduced several rules to curb abusive transfer pricing. Companies engaged in affiliated transactions are required to prepare transfer pricing documentation, which authorities can request at any time.

The country has also adopted the Advance Pricing Agreement (APA) mechanism, allowing tax authorities and taxpayers (and sometimes partner countries) to agree on what constitutes fair pricing over a fixed period − aimed at reducing disputes.

Harry Su’s proposal for mandatory external audits on transfer pricing could add a stronger layer of oversight. Similar mechanisms are already in place in other countries, including India, where companies engaged in cross-border related-party transactions must submit audited transfer pricing reports in addition to their annual financial statements.

This rule is particularly aimed at preventing profit shifting by multinationals in sectors such as technology and pharmaceuticals.