TPcases

PT Nanindah Mutiara Shipyard Ltd reported losses for FY 2013.

The tax authorities issued an assessment where the income of the company was increased by a substantial amount referring to applicable transfer pricing regulations.

Nanindah Mutiara Shipyard Ltd filed a complaint with the Tax Court, but the Tax Court upheld the assessment.

An application for judicial review was then filed with the Supreme Court.

Judgement of the Supreme Court
The Supreme Court ruled in favor of Nanindah Mutiara Shipyard Ltd. The Tax Court had erred in assessing facts, data, evidence and application of the law. The decision of the Tax Court was canceled and the petition for judicial review was granted. Losses reported by Nanindah Mutiara Shipyard Ltd were not due to non-arm’s length pricing, but rather exceptional circumstances that occurred at the local company in the years following 2010.

Excerpts:
”
…
a. that the reasons for the Petitioner’s petition for judicial review in the a quo case are positive corrections to Business Circulation amounting to Rp45,920,139,538.00; which the Panel of Judges of the Tax Court maintains can be justified, because after examining and re-examining the arguments put forward in the Memorandum of Review by the Petitioner for Judicial Review in connection with the Counter Memorandum of Review, it can invalidate the facts and weaken the evidence revealed in the trial. as well as legal considerations of the Tax Court Panel of Judges, because in the a quo case in the form of substances that have been examined, decided and tried by the Tax Court Judges there are errors in assessing facts, data, evidence and application of the law as well as real mistakes in it, so that the Supreme Court of Justice canceled the a quo Tax Court decision and tried again with the legal considerations below, because in casu it is related to the evidentiary value that prioritizes the principle of material truth and based on the principle of substance over the form which has fulfilled the Ne Bis Vexari Rule principle as which has required that all administrative actions must be based on applicable laws and regulations. Whereas therefore the object of the dispute is in the form of a positive correction of Business Circulation amounting to Rp.45,920,139,538.00;which have been considered based on facts, evidence and application of the law and decided with the conclusion that the Panel of Judges maintains that there are factual errors and legal errors, so that the Supreme Court of Justice overturned the a quo decision and retrial with the consideration that due to in casu, the relationship with a special relationship, there are indications that the indicator of the current level of profit of the Appellant for the Review Applicant for the 2013 Fiscal Year which is below the normal profit range of similar companies, is not due to the existence of transfer pricing or pricing for transactions between parties that have a special relationship, but due to the impact of riots, causing extraordinary costs and companies not operating at full capacity.
Thus, the Transfer Pricing Documentation of the present Appellant for the Review of the Appellant for the 2013 Fiscal Year, thus causing the loss suffered by the current Appellant of the Appeal for the Review of the 2013 Fiscal Year is the effect of extraordinary events in 2010 namely riots. at the shipyard in one of the companies belonging to the business group which is located adjacent to the shipyard of the present Appellant of the Applicant for Judicial Review. Besides that, The Panel of Supreme Court Justices is of the opinion that the decrease in income received by the Appellant now, the Petitioner for Review for the Fiscal Year after the riots, is due to the decline in new shipbuilding projects and the cancellation of orders that have caused ongoing shipbuilding projects to be neglected. decisive factors include the decline in new shipbuilding projects. Whereas on the basis of a state of chaos, it is considered as an extraordinary situation (force majeure) or a state of coercion (overmacht) which will directly result in the assessment of legal obligations on the fulfillment of tax obligations not being in the expected level of position,

b. whereas therefore, the reasons for the Petitioner’s application for judicial review can be justified and sufficiently based on law because the arguments submitted are decisive opinions and therefore deserve to be granted and because there is a decision of the Tax Court which clearly contradicts the prevailing laws and regulations. applies as stipulated in Article 91 letter e of Law Number 14 of 2002 concerning the Tax Court and related laws, so that the accrued tax is recalculated into overpayment of Rp3,818,166,381.00; with the following details:

…based on the above considerations, according to the Supreme Court, there are sufficient reasons to grant the petition for review;”

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