The dispute between PT Halliburton Indonesia (HI) and the Directorate General of Taxes (DGT) regarding the correction of Article 26 Income Tax objects on Management Fee payments for the June 2020 period serves as a significant precedent in Indonesian international tax law. The core conflict centered on differing views regarding administrative compliance for applying the 0% rate under the Indonesia-USA Double Taxation Convention (DTC). The DGT issued the correction because, during the audit, the taxpayer was deemed unable to present a valid Certificate of Domicile (CoD) or DGT Form, thus the taxing rights were claimed entirely by Indonesia at the domestic rate of 20%.
During the trial, PT HI consistently refuted these allegations by presenting evidence that all payments to Halliburton Energy Services Inc. were fees for services that did not involve a Permanent Establishment (PE) in Indonesia. The legal opinion of the Board of Judges eventually emphasized the principle of material truth and the legal facts revealed. The Board found that PT HI was able to present a DGT Form validated by the United States tax authority (IRS), which substantively met the requirements of Director General of Taxes Regulation Number PER-25/PJ/2018.
The implications of this ruling confirm that administrative delays during the audit process do not necessarily forfeit the substantive rights of the Taxpayer if supporting documents can be proven valid in court. In conclusion, the Board of Judges annulled all DGT corrections as the formal and material requirements of the DTC were met, providing legal certainty for multinational companies conducting intra-group transactions.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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