Transfer Pricing Dispute and Its Implications for Judicial Review in Indonesia
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This study examines a transfer pricing dispute in Indonesia and its implications for evaluating Judicial Review, focusing on Tax Court Decision Number PUT-014532.15/2020/PP/M.XIIIB of 2022. Using a qualitative interpretive case-study approach, data were collected through document analysis and a semi-structured interview with a Tax Court Judge and analyzed using Thematic Analysis. The findings show that the dispute did not primarily concern the selection of the Transactional Net Margin Method (TNMM), but rather its application through functional characterization, period selection, comparable-company selection, comparability adjustments, and evidentiary support. The Tax Court accepted the Directorate General of Taxes’ use of 2017 single-year data, four comparable companies, and a median operating margin of 7.49 percent, resulting in the full upholding of an IDR 76.21 billion adjustment. Conversely, the Taxpayer’s explanation of underutilization and commercial losses was not sufficiently operationalized into a measurable capacity adjustment supported by adequate causal evidence. These findings indicate that the implications for Judicial Review depend on distinguishing potential legal issues from disputes that predominantly involve reassessment of facts and evidence. Issues concerning the traceability of judicial reasoning, the attribution of adjustments, and the basis of particular methodological decisions may warrant further legal evaluation only insofar as they can be linked to the statutory grounds for Judicial Review. The study demonstrates that transfer pricing disputes are shaped by the interaction of methodological choices, evidentiary quality, and judicial reasoning, which collectively determine the scope of further legal remedies.
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