Taxpayers Must Know! Here is the Strategy to Counter the DJP Output VAT Correction Caused by Differences in Marketplace Sales Turnover

Horizontal Reconciliation Between VAT and CIT: Analysis of Turnover Discrepancy Disputes and Taxpayer Burden of Proof

Self-Assessment Principle and Output VAT Tax Base Corrections

The implementation of the self-assessment principle in the Indonesian tax system demands high report accuracy, particularly in the horizontal reconciliation between Value Added Tax (VAT) obligations and Corporate Income Tax (CIT). Corrections to the Tax Base (DPP) of Output VAT based solely on the discrepancy between CIT turnover and Output VAT DPP are rampant dispute issues, as reflected in Tax Court Decision Number PUT-003774.16/2021/PP/M.IIIA. This ruling highlights the crucial role of the Taxpayer in proving that the turnover reported for CIT has already included the VAT element (gross up) or that its VAT has been reported separately.

Core Conflict Over July 2017 Positive Discrepancy

The core of the conflict in this case centers on the correction of the Output VAT Tax Base for the July 2017 Tax Period amounting to Rp2,338,384,444.00 carried out by the Respondent (Directorate General of Taxes). The Respondent argues that this correction is valid due to a positive discrepancy between the sales turnover used as the basis for calculating Corporate Income Tax and the Output VAT Tax Base reported by the Taxpayer (Applicant). In the view of the tax authority, the discrepancy is automatically assumed to be a delivery of Taxable Goods (BKP) liable to VAT for which no Tax Invoice has been issued or reported.

Applicant Objection Regarding Marketplace Sales

On the other hand, the Applicant firmly rejects the entire correction. The Applicant's argument is based on the fact that sales transactions, particularly those conducted through marketplaces, have been subjected to VAT and reported. The Applicant explains that the value difference occurs because CIT turnover is reported in gross value (including VAT), whereas the VAT Tax Base is the net value (excluding VAT). To prove its objection, the Applicant presents details of marketplace sales data and relevant copies of Tax Invoices to the Panel of Judges.

Judicial Resolution and Partial Verification of Evidence

In resolving this dispute, the Panel of Judges emphasizes Article 76 of the Tax Court Law, which imposes the burden of proof on the Applicant. The Panel examines the evidence submitted and finds that the Applicant only succeeds in convincing the Panel on a portion of the corrected value. A total of Rp1,339,697,583.00 is successfully proven to have its VAT collected and reported. However, for the remaining discrepancy of Rp998,686,861.00, the Applicant fails to provide convincing evidence. Therefore, the Panel of Judges decides to partially grant the Appeal request, canceling a portion of the correction and maintaining the remaining unproven correction.

Ruling Implications and Mitigation Strategies for E-Commerce Taxpayers

The implications of this Decision are very clear for Taxpayers, especially those who utilize digital or e-commerce sales channels. This ruling reinforces the view that data reconciliation between VAT and Income Tax is the primary focus of tax audits. The failure of a Taxpayer to document in detail and differentiate between the gross and net values of sales turnover will become a legally valid loophole for correction. The mitigation strategy for Taxpayers must focus on preparing a comprehensive reconciliation working paper that encompasses all differences from an early stage, making it ready for use as primary evidence during the litigation phase.