Service Exports Aren't Just About the PMK List: How PT HI Won the 0% VAT Dispute in the Tax Court

Tax Dispute: VAT on Export of Taxable Services and the Supremacy of Substance for PT HI

VAT disputes concerning the export of Taxable Services (JKP) often become a stumbling block for multinational companies due to rigid restrictions in implementing regulations. The case of PT Halliburton Indonesia (HI) in Decision Number PUT-011669.16/2023/PP/M.XVB Year 2025 serves as a crucial precedent regarding the supremacy of service utilization substance outside the Customs Area over the limited types of services prescribed in PMK-32/PMK.03/2019.

Core Conflict: Destination Principle vs. Rigid PMK Restrictions

The core conflict began when the Directorate General of Taxes (DGT) adjusted the reporting of technical and management support services provided by PT HI to its overseas affiliate, Halliburton Worldwide Limited (HWL). The DGT argued that these services did not fall within the categories eligible for the 0% rate under Article 3 of PMK-32/PMK.03/2019, thus reclassifying them as domestic transactions subject to 10% VAT. Conversely, PT HI defended its position using the destination principle, asserting that the services were factually utilized to support HWL's projects outside Indonesian territory.

Judicial Consideration: Progressive Legal Breakthrough on JKP Export

The Board of Judges, in their consideration, adopted a progressive legal breakthrough. The judges emphasized that the essence of JKP export under the VAT Law is the utilization of services outside the Customs Area. The existence of a written agreement (Intercompany Service Agreement) and evidence of work correspondence proved that the economic benefits of the services were not enjoyed in Indonesia. The Board opined that the service type restrictions in the PMK should not negate the rights of Taxpayers who have substantially exported services in accordance with the mandate of higher-level legislation.

Implications: Strengthening the Evidence of Overseas Utilization

The implications of this decision provide a breath of fresh air as well as a warning for Taxpayers. Legally, this ruling strengthens the position that as long as supporting evidence (contracts and work outputs) demonstrates overseas utilization, the 0% rate should apply. For PT HI, this victory eliminates an undue VAT burden. However, administratively, Taxpayers are still advised to strengthen transfer pricing documentation and deliverables details to mitigate the risk of future reclassification by tax authorities.

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