Tax Dispute Analysis of Incorrect Vat Payment on Offshore Royalty Viewed From the Ease of Administration Principle (Case Study of PT X)
Authors: Santoso Iman , Ningrum Mikha Grinelda , Setyowati Milla Sepliana 
Published: September 2024

The purposes of this research are: (i) to analyse basic considerations from the Indonesian Tax Authority (ITA) in making regulations regarding the incorrect transfer of VAT on taxable services from outside customs territory which cannot be overbooked; and (ii) to analyse whether the administrative sanctions penalized to the taxpayer are appropriate from the ease of tax administration principle’s perspective. This study is using (i) VAT imposition on intangible taxable goods and services from outside the Indonesian customs territory; (ii) Ease of Administrative principles: certainty, efficiency, convenience of payment, and simplicity as theoretical references. The research is categorized as applied study with a qualitative method using qualitative data collection techniques through literatures and field studies (interview with various key informants from ITA, representatives of the taxpayers, and taxation experts and academia. The qualitative analysis on data/information was done via triangulating process with related theories, VAT laws and regulation, as well as expert opinions. Results of the study conclude that the basis of considerations of the ITA makes regulations for the utilization of Intangible Taxable Goods and Taxable Services from Outside the Customs Territory, which cannot be done with overbook because both offshore VAT objects are difficult to detect and can be used for tax avoidance modus by the taxpayers. The ownership of documentary evidence is actually a foreign party while the person who is supposed to make a transfer request is the owner of the document evidence, and the tax that has been deposited has become a tax credit and will not move to another place other than the state treasury because the tax credit is the taxpayer's right. Considerations taken by ITA have not met the theory of good tax administration because there has been no legal formulation related to this matter and ITA's accountability is still considered to be lacking in terms of supervision and control. Administrative sanctions penalized to PT X due to tax deposit errors are not in accordance with the ease of tax administration principle. Even though it is certainly stipulated in the prevailing law and regulation, but the procedure is so lengthy and detrimental to the taxpayer, increase and disrupt cash flow for business activities carried out by PT X. In terms of efficiency principle, the rejection of overbooking process creates additional compliance costs to the taxpayer, namely: fiscal financial cost, time cost and psychological cost and denial the facts that actually the fund/money have been transferred to the State Treasury.

Implications of research: To provide examples of practice in the field of how complicated tax administration procedures can cause unnecessary losses for taxpayers if the tax regulations are not made by taking into account the principle of ease of tax administration. It is also recommended that the tax authorities should reduce administrative burden for the implementation of rights and fulfillment of tax obligations that are too rigid to be more friendly in order to make it easier for taxpayers to carry out their tax obligations and make themselves a facilitator for taxpayers to increase cooperative tax compliance.

Originality/value: Ease of carrying out tax obligations for taxpayers must be something that is facilitated by the Tax Authority rather than being subject to penalties and this can be done, one way, through the application of the principle of ease tax administration in the formulation of tax regulations.