The Director General of Taxes often employs cash flow testing techniques to determine business turnover ex-officio when a Taxpayer is deemed uncooperative or their accounting records are considered unreliable. In the case of PT MBS, the Respondent made a positive correction to business turnover amounting to IDR 3,823,229,620.00 based on the accumulation of credit mutations in the company's bank statements. The Respondent argued that under Article 12 paragraph (3) of the KUP Law, tax authorities are authorized to determine taxes due if the data in the tax return is incorrect, and every inflow is considered an addition to economic capacity under Article 4 paragraph (1) of the Income Tax Law that has not been reported as turnover.
However, the essence of this dispute lies in the classification of the transactions behind the figures. The Appellant provided a strong rebuttal by detailing that not all inflows are company revenue. There are third-party fund components such as tenant profit-sharing (consignment), Entertainment Tax and Parking Tax deposits that must be remitted to the Regional Treasury (not company rights), and operational fund transfers (Inter-office Accounts) from the head office. Through a rigid evidentiary process in court, the Board of Judges applied the principle of material truth. The Board held that as long as the Appellant could prove the causality of bank mutations with supporting documents such as consignment agreements and regional tax payment slips, these mutations could not be categorized as income. This decision reaffirms that cash flow testing is merely a preliminary indication tool, not final proof of income if the Taxpayer can prove the existence of trust funds or other non-taxable transactions.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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