Expense Recognition Dispute: A Case of Coal Mining Companies in Indonesia

Abstract

This study aims to identify the main causes of disputes in the expense recognition for Indonesia coal mining companies and provide recommendation on how to avoid the disputes in the future. We focus on coal mining companies which had Coal Contract of Work (CCOW/PKP2B) with the government of Indonesia. CCOW is the only way for a company to get coal mining permits in Indonesia. CCOW companies have been involved in disputes with the Directorate General of Taxation (DGT) for years. This study uses The Theory of Legal Interpretation and The Law Interpretation Concept in analysing the problems and offering solutions. This study used qualitative approach and thematic analysis in answering research questions. Based on interviews and analysis of legal documents, our result shows that the main cause of the expenses dispute problem is a different interpretation of Income Tax Law and tax clause in CCOW. Referring to the law interpretation concept, to clearly understand the rules and prevent disputes, coal mining companies and DGT need to see the tax law and CCOW systematically and historically. This study also recommends that coal mining companies can avoid expense recognition disputes by complying with the tax administration guidance and, if necessary, ask for a private ruling if there are questionable clauses.