The tax dispute between BUT NC and DGT culminated in the rejection of the appeal regarding the correction of the Final Income Tax object on Construction Services amounting to IDR 12.9 billion. The core of the dispute focused on the different interpretations of income recognition timing between the physical progress accrual basis and the tax point based on billing documents.
The conflict arose when the Respondent performed data equalization and discovered that BUT NC had issued Tax Invoices and commercial invoices in the July 2019 Tax Period but failed to report them as Final Income Tax objects. The DGT strictly adhered to Government Regulation (PP) Number 51 of 2008, which stipulates that tax is due upon payment or delivery of services as manifested through billing. Conversely, the Taxpayer argued that based on economic substance and accrual principles, the work had not reached the billed completion stage, thus the invoice was deemed not to reflect valid fiscal income for that period.
The Board of Judges, in its legal consideration, emphasized that the formality of billing documents plays a crucial role in tax legal certainty. The voluntary issuance of invoices and Tax Invoices by the Taxpayer is considered an acknowledgment of the service delivery. The Judges ruled that the Taxpayer failed to provide sufficient evidence to invalidate the validity of the self-issued invoices as the basis for tax imposition.
This decision carries serious implications for construction companies to better synchronize administrative billing with field progress reports. A vital lesson for Taxpayers is that Indonesian tax administration heavily prioritizes document formalities (invoices/tax invoices) as evidence of the tax due date, which often overrides physical progress estimation arguments without irrefutable material evidence.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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