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An Intercompany Agreement sets out the terms and rules when different parts of the same company group do business with each other in Indonesia. It covers everything from sharing resources and services to handling payments and profits between related entities, making these internal dealings clear and legally sound.

These agreements help companies comply with Indonesian transfer pricing regulations and tax laws while protecting each entity's interests. They're especially important for multinational companies operating in Indonesia, as they provide documentation for tax authorities and help prevent disputes about how value moves between connected businesses. Good agreements include clear pricing methods, service levels, and risk allocation between the parties.

Your business needs an Intercompany Agreement when different parts of your company group start sharing resources, services, or assets in Indonesia. This becomes crucial when subsidiaries begin trading with each other, providing management services, sharing intellectual property, or lending money between entities.

Put this agreement in place before starting significant inter-group transactions, especially if they cross borders. Indonesian tax authorities closely examine related-party dealings, so having clear documentation protects you from transfer pricing challenges. It's particularly vital when setting up new subsidiaries, restructuring operations, or launching shared service centers that serve multiple group companies.

• Service Agreements: Cover ongoing services between group companies, like IT support, HR, or administrative help. Include detailed service levels and pricing methods.
• Distribution Agreements: Used when one company sells or distributes products for another group company in Indonesia, with clear profit-sharing terms.
• IP Licensing Agreements: Handle sharing of trademarks, patents, or technology between group entities, with royalty calculations.
• Management Agreements: Detail executive oversight and strategic support services between parent and subsidiary companies.
• Financial Agreements: Cover intercompany loans, cash pooling, and financial support arrangements between group entities.

• Group Legal Teams: Draft and review Intercompany Agreements to ensure legal compliance and protect corporate interests across entities.
• Board Directors: Approve and sign these agreements as authorized representatives of their respective group companies.
• Finance Directors: Oversee transfer pricing arrangements and ensure financial terms align with Indonesian tax regulations.
• Tax Advisors: Review agreements to confirm compliance with Indonesian transfer pricing rules and documentation requirements.
• Operational Managers: Implement and monitor service levels, resource sharing, and performance metrics defined in the agreements.

• Company Details: Gather legal names, registration numbers, and addresses of all group entities involved in Indonesia.
• Transaction Scope: Define exact services, products, or resources being shared between entities.
• Pricing Structure: Document transfer pricing methodology and supporting market comparables.
• Service Levels: List specific performance metrics, delivery timelines, and quality standards.
• Risk Allocation: Identify how operational and financial risks will be shared between entities.
• Compliance Check: Review Indonesian transfer pricing regulations and documentation requirements.
• Authority Verification: Confirm signing authority levels within each entity.

• Party Details: Full legal names, registration numbers, and addresses of all group entities involved.
• Service Description: Detailed scope of services, products, or resources being exchanged.
• Pricing Terms: Clear transfer pricing methodology, payment terms, and currency specifications.
• Performance Standards: Specific service levels, quality metrics, and delivery requirements.
• Term and Termination: Duration, renewal conditions, and termination procedures.
• Confidentiality: Data protection and information sharing protocols.
• Dispute Resolution: Indonesian law as governing law, jurisdiction, and arbitration provisions.
• Signature Block: Authorized signatories' details and company stamps.

An Intercompany Agreement differs significantly from a Business Acquisition Agreement. While both involve transactions between companies, they serve distinct purposes in Indonesian business law.

• Relationship Type: Intercompany Agreements govern ongoing transactions between related entities within the same group, while Business Acquisition Agreements handle one-time purchases between independent companies.
• Pricing Approach: Intercompany Agreements must follow transfer pricing rules and arm's length principles, whereas Business Acquisition Agreements focus on market-based valuations.
• Regulatory Oversight: Intercompany Agreements face scrutiny from Indonesian tax authorities for transfer pricing compliance, while Business Acquisition Agreements primarily concern competition law and ownership transfer regulations.
• Duration: Intercompany Agreements typically operate continuously with periodic reviews, but Business Acquisition Agreements conclude once the transaction completes.