Don't Just Argue! Understand Article 76 Before the Burden of Proof Crushes You.

In tax litigation, victory is determined not only by who has the best legal argument but by who can meet the standard of proof set by the Judge. The heart of this process lies in Article 76 of Law Number 14 of 2002 concerning the Tax Court. This article is not merely a procedural rule; it is a mandate for Judges to excavate material truth—the actual truth behind formal documents.

Elements of Proof Determined by the Judge

Based on Article 76, Judges possess full authority ("dominus litis") to determine four crucial elements in the proceedings:

1. What Must Be Proved: The Judge identifies which facts are the main point of contention (core dispute) and relevant for the decision, separating noise from the crux of the issue.
2. Burden of Proof: The Judge decides who is obligated to prove a specific claim. Is it the Taxpayer who must prove an expense is real, or the Tax Authority who must prove the existence of concealed income?
3. Assessment of Evidence: The Judge evaluates the strength and relevance of the submitted evidence. Not all evidence carries equal weight; the Judge's conviction (Article 78) is the final determinant.
4. Validity of Evidence: The Judge ensures that the evidence submitted meets legal requirements, where a minimum of 2 (two) pieces of evidence as referred to in Article 69 paragraph (1) is required.

Application in Hearings: Pursuing Material Truth

The application of Article 76 is vividly seen in complex disputes such as Transfer Pricing or transaction recharacterization. For instance, in cases where the Appellee (Tax Authority) corrects management service fees and deems them as constructive dividends.

In this scenario, the Judge uses the authority of Article 76 to distribute the burden of proof to achieve material truth:

• Appellee's Burden: Since the Appellee asserts a positive correction (claiming the service transaction is non-existent and is actually a dividend), the Judge burdens the Appellee to prove this allegation with competent evidence, not mere assumptions. If the Appellee fails to present comparability analysis or cash flow evidence supporting the dividend accusation, the correction will be overturned.
• Appellant's Burden: Conversely, if the dispute concerns an Input Tax Credit claim, the Judge will require the Appellant (Taxpayer) to prove that the goods/services were indeed delivered through cash flow, goods flow, and supporting documents (tax invoices, commercial invoices).

Uniquely, the Elucidation of Article 76 asserts that Judges are not limited to facts presented by the parties alone. Judges may consider new facts revealed during the hearing to ensure justice prevails. This confirms that the Indonesian Tax Court adheres to the principle of free evaluation of evidence bound by rules, to discover what actually occurred economically, not just what is written on paper.

Conclusion

Article 76 is a vital instrument ensuring that tax disputes are resolved based on facts, not speculation. For Taxpayers, understanding these four elements means being prepared to present "2 valid pieces of evidence" and convincing the Judge that their business substance is genuine.