No Nominative List, Billions in Promotion Costs of PT TPI Denied by Tax Court!

PT TPI Tbk Promotion Expense Dispute: PMK Number 02/PMK.03/2010 Compliance and Sign & Off-Shelf Display Corrections

The legal certainty of promotion expense deductibility heavily relies on the taxpayer's formal compliance in preparing a nominative list as regulated by PMK Number 02/PMK.03/2010. In the dispute of PT TPI, the Board of Judges emphasized that the absence of this formal document results in a fiscal correction that cannot be refuted by substance alone. The conflict arose when the Respondent corrected Sign & Off-Shelf Display expenses amounting to IDR 1,034,449,999, identifying them as promotion costs without a nominative list. The Petitioner argued these were sales discounts given to outlets for target achievement, thus being a reduction of gross income per Article 6 paragraph (1) of the Income Tax Law.

Judicial Considerations: Promotion Characteristics and Legal Consequences of Missing Nominative Lists

However, the Board of Judges opined that displaying products at outlets aims to introduce and strengthen the product image to the general public, which characterizes promotion costs. Since the Petitioner failed to attach the mandatory nominative list, the Board of Judges upheld the correction. This decision serves as a crucial lesson that accounting classification as "sales discounts" does not automatically waive formal obligations if the transaction substance meets promotion criteria.