Input VAT Denied Despite Real Transactions? Why Taxpayer's 'Good Faith' Fails Against the Seller's PKP Status (Decision PUT-004951.16/2021/PP/M.XVIIIA Tahun 2025)

The issuance of a Value Added Tax Underpayment Assessment Letter (SKPKB) due to the correction of Input Value Added Tax (VAT) has been the focus of the dispute in Tax Court Decision Number PUT-004951.16/2021/PP/M.XVIIIA Tahun 2025. This case, involving PT BML(the Appellant), sharply highlights how the provisions of Article 13 paragraph (5) of the Indonesian VAT Law serve as an absolute stumbling block for Taxpayers claiming VAT credits from tax invoices issued by problematic Taxable Entrepreneurs (PKP). Although the Appellant insisted that a real transaction occurred and they acted in good faith, the Respondent (Directorate General of Taxes/DGT) maintained the correction of the Input VAT amounting to Rp700,000.00, based on findings that the PKP issuer of the invoice was indicated not to have filed their periodic VAT returns or had their PKP status revoked.

Core Conflict: Transaction Substance vs. Invoice Validity

The core conflict in this case is the contradiction between the substance of the transaction (the reality of the delivery of Taxable Goods/Services) and the formal-material validity of the Tax Invoice. The Appellant, as the buyer, relied on Article 9 paragraph (8) of the VAT Law, which allows crediting as long as the requirements are met, and emphasized that they cannot be held accountable for the administrative non-compliance of a third party. The Respondent, through the correction arguments, based the denial on Article 13 paragraph (5) of the VAT Law, which requires that a Tax Invoice contain the actual information and meet material requirements. For the Respondent, the non-compliance of the PKP issuer inherently nullifies the material validity of the invoice.

Evaluation and Resolution by the Panel of Judges

In the resolution of this dispute, the Panel of Judges explicitly upheld the Respondent's arguments. The Panel was of the opinion that the Appellant's good faith could not negate the failure of the Tax Invoice to meet the material requirements by the Selling PKP, in accordance with Article 13 paragraph (5) of the VAT Law. Indications of the Selling PKP's non-compliance, such as non-active status or failure to file VAT returns, were deemed sufficient evidence for the Panel to conclude that the Input Tax Invoice was invalid for crediting. This decision firmly rejected the Appellant's appeal.

Implications and the Vital Role of Administrative Due Diligence

The implications of this Decision for the Taxpayer's tax practice are highly significant. It confirms the principle that the risk of litigation over Input VAT shifts to the buyer Taxpayer if they fail to verify the compliance and PKP status of their counterparty. The lesson learned is that Taxpayers must not only ensure the transaction occurred but are also obliged to conduct continuous administrative due diligence on all trading partners issuing Tax Invoices. This Decision serves as a critical reminder that the formal and material compliance of a Tax Invoice is the last defense in maintaining the right to credit VAT.