Victory in Appeal! PT BPD JBB Successfully Overturns Billions in Tax Adjustments Regarding Customer Interest

PT BPD JBB Tax Dispute: Interest Expense Equalization and Bank Secrecy Principles

PT BPD JBB successfully overturned the entire Article 4 (2) Income Tax base adjustment worth IDR 489.27 billion at the appeal level. The dispute centered on differences in interest expense equalization between the bank's books and tax returns, where tax authorities insisted on applying a final rate to all discrepancies not accompanied by detailed customer identity information.

Core Conflict: Mechanical Equalization vs. Customer Data Protection

The core conflict began when the Respondent (DGT) performed an equalization and found a difference in interest expenses that had not been taxed. DGT assumed the entire difference was a taxable object because the Petitioner did not provide names, Tax IDs (NPWP), and account numbers of customers during the audit. Conversely, the Petitioner argued that most of the interest was paid to non-tax subjects (government agencies), Pension Funds, or customers with balances below the threshold (IDR 7.5 million), which according to Government Regulation No. 131 of 2000 are not subject to withholding. The Petitioner also emphasized the obligation to maintain Bank Secrecy under the Banking Law, which prevents sharing detailed customer data without specific procedures.

Judicial Consideration: Sampling Evidence and Procedural Flaws

In its legal consideration, the Board of Judges stated that tax assessment must be based on actual circumstances. Through a sampling evidence test during the hearing, it was proven that the interest items adjusted by DGT indeed fell into categories exempted from Final Income Tax withholding. Furthermore, the Board highlighted a procedural flaw where the Tax Office (KPP PMB) issued assessments for branch offices across Indonesia without following the site audit mechanism regulated in SE-28/PJ/2013, thereby exceeding its administrative authority.

Verdict Implications: Strengthening Substance Over Form

This decision confirms that equalization should not be performed mechanically without considering the substance of tax exemptions provided by regulation. For the banking industry, this victory strengthens the legal position regarding customer data protection and the importance of formal audit procedures by tax authorities. In conclusion, the Board of Judges canceled all of the Respondent's adjustments as they were not supported by strong material evidence and violated formal procedures.