The dispute regarding Output VAT corrections originating from Sales Returns and Ledger Data Differences (Sales Discounts) was the focus of this Tax Court Decision. Although the DGT attempted to link this VAT correction to Corporate Income Tax Turnover findings, the Panel of Judges viewed this dispute as a purely VAT issue that must be proven independently. The correction arose because the DGT compared the VAT Return (SPT PPN), which had been adjusted for returns, with the Output Tax Invoices that the Taxpayer issued on a gross basis.
The Taxpayer (PT HI) argued that this correction was illogical to link with Corporate Income Tax because the substance being compared was VAT data. The Taxpayer had submitted Sales Return Notes and Credit Notes proving the validity of the returns and discounts provided. Meanwhile, the DGT maintained its stance based on the lack of link-and-match data provided by the Taxpayer.
The opinion of the Panel of Judges was very clear: the DGT, as the party performing the correction, failed to provide a convincing explanation regarding the link between the substance of the VAT DPP correction (based on VAT differences) and the Corporate Income Tax Turnover correction. As the Taxpayer had submitted adequate supporting evidence to prove that the sales returns and discounts indeed occurred, the Panel of Judges canceled the correction for Sales Returns (Rp29,850,777.00) and Ledger Data Differences (Rp1,919,500.00) in their entirety for the February 2017 Tax Period.
This decision serves as a strong precedent that the DGT holds a high burden of proof to link purely VAT corrections with Corporate Income Tax turnover, especially if the Taxpayer has completed documentation for returns and discounts in accordance with VAT regulations.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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