The Legitimacy of Nominative List Administrative Requirements on PFME: PT NI Corporate Income Tax Dispute

The corporate income tax dispute of PT NI centered on a correction of Product Fixed Marketing Expense (PFME) amounting to IDR 20.7 billion, which the Respondent disallowed because the nominative list allegedly failed to meet the formal requirements of PMK-02/2010. The Respondent insisted that the absence of detailed Tax IDs (NPWP) and addresses of recipients in the list automatically forfeited the Taxpayer's right to deduct these costs under Article 6, Paragraph (1) of the Income Tax Law.

However the Petitioner Asserts Restrictive New Norms and Hierarchy of Legislation

However, the Petitioner presented a strong constitutional argument, stating that PMK-02/2010 created restrictive new norms that contradicted the Income Tax Law as the higher legal authority. In its consideration, the Board of Judges agreed with the Petitioner, emphasizing that according to the Law on the Formation of Legislation, a Ministerial Regulation cannot revoke the right to deduct expenses that substantively meet the 3M criteria (Obtaining, Collecting, and Maintaining income) solely based on administrative hurdles.

This Legal Resolution Establishes Vital Precedents on Substance Over Form Limits

This legal resolution resulted in a victory for the Taxpayer regarding the PFME position. The Board of Judges decided to cancel the Respondent's entire correction of said promotion expenses, asserting that the principle of substance over form must prevail and that the delegation of authority in the Income Tax Law does not include the minister's power to absolutely disqualify expenses through administrative nominative list requirements. This decision serves as a vital precedent regarding the limits of regulatory authority below the level of Law.