The provisions of Final Income Tax (PPh) Article 4 Paragraph (2) explicitly regulate specific types of income where the tax is deemed settled upon withholding or payment, and the tax paid cannot be credited against the Annual PPh calculation. In the context of the Tax Court Decision Number PUT-004902.25/2021/PP/M.XVIIIA Tahun 2025, the core dispute focused on the tax treatment of telecommunication network interconnection service fees received by the Appellant (PRM BLG). The Directorate General of Taxes (DGT) insisted that the income from this service should be classified as Final PPh Article 4 Paragraph (2), a view that effectively eliminates the Taxpayer's right to credit the PPh Article 23 that had been withheld by the service payer. This dispute serves as an important case study testing the boundaries of applying the Final PPh regime.

The Essence of the Fiscal Conflict

The essence of this fiscal conflict is a fundamental difference in legal interpretation. The Appellant consistently argued that the fees for telecommunication network interconnection services constitute Other Services which are subject to PPh Article 23 withholding, as governed by the positive list of services in Minister of Finance Regulation Number 141/PMK.03/2015. Consequently, the tax withheld is non-final and must be creditable. Conversely, the DGT, through its correction, attempted to categorize this income as part of Other Specific Income that is finalized based on Article 4 Paragraph (2) of the Income Tax Law, even though there is no specific regulation explicitly finalizing telecommunication services. This correction, which resulted in the issuance of an Underpaid Tax Assessment Letter (SKPKB) for Final PPh, essentially challenged the crediting right of the Taxpayer's PPh Article 23.

Judicial Opinion and Verification

The legal opinion presented by the Panel of Judges was clear, anchored in the principle of the positive list in taxation. The Panel affirmed that the imposition of Final PPh can only be carried out on income types explicitly regulated in Article 4 Paragraph (2) of the Income Tax Law and its implementing regulations. After verification, the Panel confirmed that the disputed service (telecommunication network interconnection services) is not included in the finalized list, such as land/building rentals or construction services. Since there was no strong legal basis for imposing Final PPh, the Panel concluded that the correct tax treatment is PPh Article 23. This judicial decision invalidates the DGT's correction and affirms the Taxpayer's right to credit the PPh Article 23 that had been withheld, granting the appeal in full.

Implications for Tax Compliance Practices

This Tax Court Decision carries significant implications for tax compliance practices. The ruling serves as a precedent that underscores the importance of legal certainty and limits overly broad interpretations of the Final PPh regime. Taxpayers now possess a stronger legal foundation to defend the PPh Article 23 treatment for services that are not explicitly finalized. This case is also a reminder to the DGT that the imposition of Final PPh must be supported by clear regulations and should not conflict with the general, non-final provisions of PPh Article 23.

A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here