The Fatal Danger of TP Doc Inconsistency: Why Real Third-Party Transactions are Still Corrected Due to Procedural Gaps

The Dispute Over Cost of Goods Sold (COGS) Correction

A dispute over Cost of Goods Sold (COGS) worth IDR 29.8 billion emerged when the Directorate General of Taxes (DGT) questioned the existence of shell purchases by PT MSP from third parties. The tax authority utilized formal compliance testing by comparing the list of transactions in the Transfer Pricing Documentation (TP Doc) against the audited financial statements. A data discrepancy—where the TP Doc stated all non-commodity purchases originated from affiliates, while the Tax Return reported third-party transactions—became the primary basis for cost disqualification. MSP argued that administrative negligence in the TP Doc should not eliminate the substantial right to recognize real operational costs; however, the Board of Judges held a different view. The judges emphasized that inconsistent internal information and the seller's profile, which was not a palm oil processor, undermined the credibility of the goods' flow. This ruling sends a strong signal to taxpayers regarding the urgency of data synchronization across tax documents, as formal inconsistencies can nullify material evidence.

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