Beware! Selling Company Waste and Used Goods is Now Officially a Tax Target

VAT Classification Dispute: PT CPJF vs. Tax Authority on Non-Core Deliveries

The dispute over the classification of Value Added Tax (VAT) objects on the delivery of goods that are not the company's main products has resurfaced in the latest decision involving PT CPJF. The core of the conflict focuses on the interpretation of Article 4 paragraph (1) letter a of the VAT Law, where the Respondent made a positive correction on the delivery of used goods and operational waste which were considered as delivery of Taxable Goods (BKP) within the framework of business activities. Conversely, the Taxpayer argued that these transactions were incidental and not in accordance with the registered Business Field Classification (KLU), so they should not be subject to VAT.

Judicial Perspective: The Broad Scope of Business Activities

The Panel of Judges in its legal consideration emphasized that the scope of "business activities or work" in the VAT Law has a broad spectrum, covering all activities carried out routinely to support company operations, not limited to the main business line. Because the sale of used goods was carried out repeatedly, the Panel determined the transaction as a valid VAT object. The implication of this decision requires every business actor to be more vigilant in administering the sale of side assets or industrial waste, because negligence in collecting VAT on these items can lead to heavy administrative sanctions without the opportunity to credit the relevant Input Tax during an audit.