The ongoing debate concerning the Value Added Tax (VAT) on the Utilization of Taxable Services (JKP) from Outside the Customs Area (LDP) has reached a critical legal conclusion through the Tax Court Decision Number PUT-013718.16/2022/PP/M.XIIA Tahun 2025, which fully granted the taxpayer's appeal. Based on Article 4 paragraph (1) letter e of the VAT Law, VAT is due when JKP originating from LDP is utilized within the Customs Area, yet the key issue in dispute often revolves around the substantive proof of this place of utilization. The case involving PT MI serves as a critical study of the proof procedure required of the Directorate General of Taxes (DGT) when enforcing VAT corrections on utilized imported services.

The Core Conflict and DGT's Correction Basis

The core conflict in this dispute originated from the VAT correction on LDP JKP established by the DGT in the Underpayment Tax Assessment Letter (SKPKB). The DGT argued that the payment of costs (expense) made by the Taxpayer to an overseas affiliate, recorded in the accounting books, automatically indicated the utilization of a service that provided economic benefits in Indonesia. Consequently, the DGT required the Taxpayer to collect, deposit, and report the outstanding VAT.

The Taxpayer's Counterarguments on Stewardship Activities

The Taxpayer, through its refuting arguments, rejected this assumption. They contended that the mere existence of a cost burden is not the sole determinant of VAT liability for utilized imported services; instead, it must be proven whether the substance of the service was genuinely utilized within the Customs Area. The Taxpayer tended to emphasize that the services received could be categorized as stewardship or shareholder activities that are global in nature, thus lacking specific value added in Indonesia.

The Tax Court Panel's Legal Consideration and Burden of Proof

The Tax Court Panel, after examining the evidence and arguments of both parties, upheld the legal principle that the burden of proving the existence of a tax liability, in this case, VAT on LDP JKP, rests with the DGT. The Panel concluded that the DGT failed to present concrete material evidence (beyond just contracts or ledgers) sufficient to defeat the Taxpayer's refutation. Corrections based solely on the acknowledgment of costs in the accounting books, without real supporting evidence regarding the actual delivery and utilization of JKP specifically in Indonesia, were deemed legally unsound.

Implications and Recommendations for Cross-Border Transactions

The implications of this Full Grant decision are highly significant for Taxpayers, especially those engaging in cross-border intra-group services. This ruling establishes a strong precedent that obligates the DGT to conduct a more in-depth analysis of the substance and location of service utilization, rather than merely relying on cost allocation. Taxpayers are advised to strengthen their transfer pricing documentation, particularly the benefit test, to secure their tax position against future VAT disputes on utilized imported services.

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