The Directorate General of Taxation (DGT) frequently utilizes cash flow and accounts receivable testing as instruments to correct sales turnover, both in Corporate Income Tax (CIT) and the Value Added Tax (VAT) Output Base (DPP). In the Tax Court Decision Number PUT-013206.16/2022/PP/M.XVB Year 2025, the Appellant successfully proved that a cash receipt discrepancy of Rp3,107,950,361.00, corrected as VAT Base, was not a sales transaction.
The transaction was rather a receipt of temporary advances from an affiliated company to finance operations such as salaries and supplier invoices. Although the Appellee argued that this correction was a valid secondary adjustment from the CIT Business Turnover correction, the Tax Court Panel of Judges partially granted the appeal.
The Panel emphasized that funds proven to be used for operations and classified as temporary advances do not meet the criteria for the delivery of Taxable Goods (BKP) or Taxable Services (JKP) as regulated in Article 4 paragraph (1) letter c of the VAT Law.
This decision serves as an important precedent for Taxpayers to defend the classification of non-revenue intra-group transactions from VAT Base corrections, provided they are supported by adequate documentation such as General Ledgers and internal memos.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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