Bank D Loses Dispute Over Money Delivery Fees: Why CIT Services Are Now Definitely Subject to Article 23 Tax?

Income Tax Article 23 Dispute on Money Delivery Costs

The Petitioner's positive correction on money delivery costs amounting to IDR 956,731,418 became the focal point of the Income Tax Article 23 dispute involving PT BDI. The dispute originated from a difference in legal classification of Cash-in-Transit (CIT) services provided by third parties, where the Taxpayer argued that such services were not explicitly regulated in PMK 141/PMK.03/2015. However, the tax authority emphasized that the economic substance of the activity includes elements of security and transportation services, which are objects of withholding tax.

Contract Review and Legal Considerations by the Board of Judges

During the trial, the Board of Judges conducted a contract review of the cooperation agreement with the service provider. It was found that the scope of work was not merely moving physical cash but also included high-level security protection and risk coverage during transit. Based on Article 1 paragraph (6) letters ac and ba of PMK-141, the Board of Judges opined that the services met the criteria for security and transportation/expedition services. This decision reaffirms the principle of substance over form, where even if the contract title is not "Security Services," if the essence of the activity is asset protection, the Article 23 tax obligation remains. The implication for the banking industry is the need to re-evaluate all third-party service contracts to ensure withholding tax compliance and avoid future administrative sanctions.

'A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here'