Deceased Debtors and Flawed Nominative Lists: How PT BM Secured a Partial Victory in Tax Court?

Tax Lawsuit Analysis: PT BM and the Balance Between Formality and Material Reality

The Tax Authority issued significant adjustments to marketing expenses and bad debt write-offs due to perceived failures in meeting regulatory formality parameters. This dispute focuses on testing the deductibility of expenses under Article 6(1) of the Income Tax Law, which is frequently challenged by administrative obligations such as the nominative list per PMK 02/2010 and proof of irrecoverable debts under PMK 207/2015.

The Core Conflict: Nominative Lists vs. Force Majeure Conditions

The core conflict lies in the rigid versus flexible application of formal requirements in the face of material facts. The Respondent (DGT) insisted that without the complete identity of promotion expense recipients in a nominative list and without evidence of court submission for bad debts, the expenses are non-deductible. Conversely, the Petitioner (PT BM) argued that promotion costs were genuinely incurred for business purposes (3M), and the death of a debtor without heirs constitutes a force majeure that waives formal legal collection requirements.

Judicial Resolution: A Breakthrough for Impossible Formalities

The Board of Judges adopted a moderate approach in their resolution. Regarding promotion expenses, the Board held that while the nominative list is an oversight tool for tax withholding, the substance of the expense must still be verified; hence, expenses with strong supporting evidence (advertising, exhibitions) were granted, while undocumented souvenirs were rejected. For the bad debt of the deceased debtor, the Board provided a legal breakthrough, stating that impossible formal requirements should not obstruct a taxpayer's right to deduct a loss that has substantially occurred.

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