Why Customs Data Equalization Alone is Insufficient to Establish VAT Underpayment.

PT M Tax Dispute: VAT Taxable Base Correction Over Equalization of PEB Data and General Ledger Balances

The dispute arose when the Respondent adjusted the VAT Taxable Base (DPP) by IDR 45.9 billion through an equalization technique between Export Declaration (PEB) data and general ledger balances. The Respondent accused PT M (the Appellant) of unreported deliveries based on exchange rate differences and accounting entries. However, during the trial, it was revealed that the Respondent only based the correction on formal data comparison without performing substantive testing, such as a flow of goods test to prove the physical movement of goods or a flow of money test to confirm cash inflows from third parties.

Legal Deliberation of the Board: Failure of Substantive Proof and Tax Authority Burden

The Appellant argued that the discrepancy was purely a timing difference in revenue recognition and exchange rate fluctuations between invoice issuance and PEB registration. The Board of Judges emphasized in their consideration that corrections based solely on numerical equalization without substantive transactional evidence cannot be upheld. The Board stressed that in material tax law, the burden of proof regarding the existence of a taxable object lies with the tax authority. Since the Respondent failed to prove the actual delivery of taxable goods to specific buyers, the VAT Taxable Base correction was entirely overturned. This decision serves as a reminder for Taxpayers to always maintain detailed reconciliations between operational data and financial statements.

A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here