Tax Dispute Analysis of Incorrect VAT Payment on Offshore Royalty viewed from the Ease of Administration Principle (Case Study of PT X)

Abstract

The occurrence of selling and buying transactions cause every companies to do their VAT obligations. Tax reported by PT X which appear to be wrong can be subdued by overbooking, therefore PT X had to bear administrative sanctions. The purpose of this research is to analyze basic considerations from Directorate General of Taxes in making regulations regarding the incorrect transfer of Taxable Services from outside the custom territory which cannot be overbook and analyze whether the administrative sanctions given to taxpayer are appropriate, with Ease of Administration principle in deliberation. This research used a qualitative approach with in-depth interview and literature study for data collection. The result of this research concludes that the primary consideration Directorate General of Taxes made regulations concerning the incorrect transfer of Taxable Services from outside the customs territory is because Intangible Taxable Goods and Taxable Services from outside the customs territory are susceptible to being used by Taxpayers for the purpose of avoiding tax and the Government's control are not fully reliable. Because the regulations do not allow to do the overbook, alternative ways taken by PT X to resolve the incorrect transfer of tax is restitution, which causes administrative sanctions. With that being said, administrative sanctions that occur as a result of wrong transfer of tax do not fulfill the Ease of Administration principle.

Main Issues of Value-Added Tax Dispute in Indonesia: A Note from 2019 Tax Court Decrees

“…In addition, VAT issues have been subject to the broad scope of system improvements. Setyowati et al (2020), for example, propose the adaptation of blockchain technology into the VAT administration system. The introduction of this technology allows the DGT to directly monitor and track transactions with tax invoices that have adopted the technology.…”

“…The repetition of VAT dispute cases in the Court has triggered several previous studies, either through single case studies or a sample of several decrees. For example, Santoso et al (2020) proposed a case study analyzing disputes caused by VAT payment errors from the ease of administration perspective. Previously, Adlan and Tjen (2017) analyzed VAT disputes faced by finance companies related to the provision of insurance discounts and withdrawals of the sale of goods.…”