The Paradox of The Tax Authority'S Burden of Proof: Assessing Deductible Items without Evidence

Tax authority adjustments to deductible items are frequently overturned before the Indonesian Tax Court, a pattern commonly attributed to weaknesses in audit quality. This study examines a different possibility, namely that part of that failure originates in the design of the norm itself. Employing normative legal research with statutory, conceptual, and comparative approaches covering Germany, the Netherlands, the United States, Australia, and Poland, and using agency theory as an analytical instrument, the study identifies a contradiction within Article 12 paragraph (3) of the General Tax Provisions and Procedures Law. That provision requires the authority to obtain evidence before issuing an assessment, whereas an assessment concerning deductible items arises precisely when the taxpayer's claim remains unproven, so that the maxim affirmanti incumbit probatio operates in reverse. No comparator jurisdiction requires the authority to prove that an expense was not incurred. The study concludes that the burden of proof over deductible items should rest on the taxpayer, while the authority retains the burden over income items and over every affirmative claim it raises.