The tax authority corrected the VAT Base (DPP) on land transfers to affiliates by disregarding the taxpayer's independent appraisal report. The unilateral determination of fair market value by the Respondent without comparable evidence violates the principle of legal certainty and the self-assessment system, which are the fundamental pillars of the Indonesian tax system.
This dispute centers on the valuation difference for a 64,837 m2 land transaction between PT SPD (Petitioner) and PT SMTH. The Petitioner set the selling price at IDR 2,212,098.00/m2 based on an OJK-licensed independent appraiser (KJPP) report. However, the Respondent stipulated a price of IDR 3,069,104.00/m2 using the Quality Rating method, resulting in a VAT correction of IDR 48.8 billion. The Respondent argued that the Land Development method used by the independent appraiser was inappropriate for premium locations. Conversely, the Petitioner emphasized that the appraisal considered the unique characteristics of vast land that lacks identical market data.
The Board of Tax Judges stated in its consideration that an independent appraiser's report holds strong evidentiary weight unless the Respondent can materially prove its inaccuracy. The fact that the transaction price was 141.50% above the NJOP and 654.98% above the ZNT led the Judges to believe the price was fair. The Judges ruled to grant the appeal in its entirety because the Respondent failed to present truly comparable data and could not invalidate the KJPP report's credibility. This ruling underscores the importance of credible fair value documentation to mitigate transfer pricing correction risks in property transactions.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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