How PT DW Overturned Billions in Export Tax Base Corrections Related to Affiliated Transactions.

PT DW Tax Dispute: Annulment of VAT Export Tax Base Correction Involving Affiliate Transactions

The transfer pricing dispute between PT DW and the Respondent resulted in the Tax Court's annulment of a IDR 2,125,293,767 Export Tax Base (DPP) correction. The core conflict centered on the Respondent's application of the Comparable Uncontrolled Price (CUP) method to adjust the sale price of crumb rubber to a Singaporean affiliate. While the Respondent argued the transaction price was not arm's length compared to independent prices adjusted by SIBOR rates, the Petitioner maintained that differences in volume and timing rendered the Respondent’s internal comparables invalid.

Legal Considerations: The Relationship Between Primary and Secondary Corrections

In its resolution, the Board of Judges provided a crucial legal consideration: the VAT Export Tax Base correction is a "secondary correction" dependent on the "primary correction" of Business Turnover in the Corporate Income Tax. Based on the principle of inter-tax consistency, since the primary correction in the Petitioner’s Income Tax dispute had already been annulled in a previous decision (Number PUT-002602.15/2024/PP/M.IXA), the secondary VAT correction consequently lost its legal basis and was annulled. This ruling underscores the necessity of consistency in handling derivative tax disputes.