Tax authorities emphasize that the procurement of labels, cartons, and service tags created based on specific orders constitutes an object of Article 23 Income Tax as printing services. In the dispute between PT PL and the Directorate General of Taxes (DGT), the Respondent made a positive correction to the cost of purchasing packaging materials, which were deemed to contain elements of manufacturing or printing services (moulding). The primary legal basis used was PMK 141/PMK.03/2015, which expanded the definition of "other services" subject to income tax withholding.
The main conflict arose when PT PL claimed the transactions were purely purchases of finished goods from vendors, where ownership of the materials rested entirely with the seller. However, the DGT argued that since the products were made based on PT PL’s artwork and not mass-produced for the public, the essence of the transaction was a printing service. PT PL's inability to separate material costs and service values in the invoices strengthened the DGT's position to apply the Article 23 tax rate to the total gross value, in accordance with Article 1 paragraph (5) of PMK 141/2015.
The Board of Tax Court Judges agreed with the tax authority. The Judges emphasized that the criteria for "printing services" are met if the resulting goods have specific specifications useful only to the buyer. Since PT PL could not provide evidence of cost separation between materials and services in its billing documents, the Board decided to uphold the correction. This ruling serves as a reminder for taxpayers to be more meticulous in drafting contracts and invoices to distinguish between goods and services components to avoid tax withholding on the total transaction value.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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