The Directorate General of Taxes (DGT) frequently employs indirect methods such as accounts receivable tests and VAT equalization to adjust turnover; however, this ruling reaffirms that such methods cannot override valid primary source documents. The dispute arose when the Respondent issued a positive correction of PT MI's revenue amounting to IDR 7,399,210,827 based on discrepancies in the accounts receivable test and VAT return reconciliation. The Respondent argued that inconsistencies existed between VAT and Corporate Income Tax reporting and questioned the validity of canceled invoices from the previous year that were re-issued in the current year.
PT MI countered by arguing that the discrepancy was purely due to timing differences, incorrect Tax ID (NPWP) input by a counterparty (PT Hydril Indonesia), and foreign exchange differences, all of which were accurately recorded in their books.
In its legal consideration, the Board of Judges emphasized that according to Article 12 paragraph (3) of the KUP Law, the tax due must be determined based on the tax return unless the bookkeeping is proven incorrect. Since PT MI provided all source documents (invoices, General Ledger, bank statements) supporting its claims, the Board ruled that the direct method must prevail. The Respondent's use of an indirect method was deemed legally groundless as long as the Taxpayer’s bookkeeping was available and competent. Ultimately, the Board canceled the entire revenue correction, establishing legal certainty that concrete data outweighs equalization assumptions.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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