Nominative Lists for Entertainment Expenses Rejected by Tax Judges? Why Taxpayers Win Against Minister of Finance Regulations

The Tax Court Decision Number PUT-012226.15/2023/PP/M.XIIB Year 2025 firmly underscores the supremacy of the Income Tax Law (UU PPh) over Minister of Finance Regulations (PMK), specifically within the dispute concerning the Correction of Entertainment Expenses.

The Taxpayer, PT AJMI, successfully overturned DJP's correction valued at IDR 640,475,177.00 by arguing that the expenditures constituted legitimate costs incurred for the purpose of getting, collecting, and maintaining income (3M), in full compliance with Article 6 paragraph (1) letter a of the Income Tax Law. Conversely, DJP insisted that the deduction of these costs was invalid because the Taxpayer failed to present a Nominative List as required under PMK-02/PMK.03/2010.

The core conflict in this matter was the confrontation between substance and formality.

DJP relied on administrative formalities at the PMK regulatory level, which mandates a Nominative List as an absolute prerequisite for deducting expenses. On the other hand, the Taxpayer focused on the underlying substance, presenting evidence that the expenditures were genuinely incurred for business operations. The resolution of the Panel of Judges strengthened the Taxpayer's position. The Panel of Judges explicitly stated that the Nominative List provision within PMK-02/2010 contradicts the Income Tax Law, which acts as the Lex Superior. The obligation to maintain a Nominative List was deemed to only govern the measurable threshold of deductible expenses, rather than acting as a mandatory prerequisite for the costs to be permitted.

The analysis of this ruling carries significant implications for Taxpayers' litigation strategies.

As long as a Taxpayer can materially prove that promotional or entertainment expenditures bear a direct or indirect correlation with 3M activities to generate taxable income objects, the costs must be recognized as a deductible expense. This ruling reinforces the legal principle that places statutory laws as the primary reference point, providing legal protection for Taxpayers who are factually proven to have incurred expenses for business purposes, despite minor administrative omissions at the PMK regulatory level.