PT EI successfully secured a favorable ruling in its appeal against the Respondent's correction of Offshore VAT Input Tax for the January 2016 period, amounting to IDR 1,684,669,527.00. The dispute centered on the interpretation of Article 9, Paragraph (8), point (g) of the VAT Law and PMK No. 40/PMK.03/2010, where the Respondent contested the Tax Payment Slip (SSP) for listing the Taxpayer’s own identity instead of the foreign vendor's, while also alleging the existence of a Permanent Establishment (PE) for EESLP.
The core conflict arose when the Respondent deemed the SSP formally defective, thus ineligible to be treated as a Tax Invoice. The Respondent argued that the incomplete foreign vendor identity violated PER-10/PJ/2010 and suspected EESLP of having a PE in Indonesia due to contract duration, implying the VAT should have been collected by said PE. Conversely, PT EI provided material evidence that the payment was remitted to the state treasury, the vendor held no PE under the Indonesia-US Tax Treaty (as it only leased compressors without construction activities), and the SSP filling error was merely administrative, which should not nullify the substantial right to tax credit.
The Board of Judges emphasized in its legal opinion that material truth must prevail. The Judges found that the Respondent failed to concretely prove the existence of EESLP’s PE in Indonesia. Based on evidence of fund flows, invoices, and NTPN validation on the SSP, the Board was convinced that PT EI had indeed paid the VAT on the utilization of foreign services for business activities directly related to taxable transactions (direct-use). Consequently, administrative errors in filling out the SSP columns cannot invalidate the right to credit Input Tax that has been demonstrably paid.
Analysis of this decision underscores the importance of administrative compliance while simultaneously providing legal protection for Taxpayers as long as material aspects and cash flows can be strongly proven. This ruling reaffirms that disputes over formalities should not ignore the economic and legal fact that the tax has reached the state treasury. For Taxpayers, the implication is the need to ensure supporting documentation—such as invoices and proof of payment—is perfectly synchronized with reporting to mitigate risks of similar corrections in the future.
In conclusion, the Board of Judges overturned the Respondent's entire correction because the material requirements of tax payment were met and the PE allegation was not legally proven.
'A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here'
tpc.consulting 
tpc.consulting 
info@taxindo.co.id