Expired SIM Cards Are Not Sales? PT SMM Successfully Defends IDR 648 Billion VAT Correction in Landmark Tax Court Ruling.

Tax Ruling: Inventory Write-Off vs. Assumed Deliveries (PT SMM Case)

The determination of the Value Added Tax (VAT) base by the Tax Authority regarding inventory write-off transactions requires concrete evidence of a "transfer of goods" as mandated by Article 4 paragraph (1) of the VAT Law. In the case of PT SMM, the Respondent issued a positive correction of the VAT base for December 2020 amounting to IDR 648,968,403,571.00.

The Conflict: Expired Products vs. Undisclosed Revenue

The conflict centered on the status of expired SIM cards and vouchers. The Respondent argued that without external witnesses and valid visual documentation of destruction, the write-off must be categorized as a taxable delivery (undisclosed sales). PT SMM countered that no cash flow was generated; it was a pure business loss from unsold products that automatically expired within 30 days.

Judicial Consideration: The Interdependency of CIT and VAT

The Board of Judges highlighted the "dispute interdependency" aspect. Since the Corporate Income Tax (CIT) correction on the same object had been overturned due to lack of cash flow evidence, the VAT correction automatically lost its legal standing. The Judges ruled that the write-off was a logical business risk of telecommunications distribution, not a hidden sales transaction.

Implications: Legal Fate of the Accessory (Accessorium)

This decision reaffirms that VAT disputes which are derivative of CIT disputes will follow the legal fate of the primary dispute (accessorium), provided the economic substance is identical. For Taxpayers, this emphasizes the importance of integrating documentation between operational and tax reports to mitigate risks on non-transactional business losses.

Conclusion

In conclusion, tax corrections cannot be based on mere assumptions. Without material evidence of a "transfer," a write-off remains a loss, not an object of VAT. This ruling protects companies from arbitrary recharacterization of genuine business risks.

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