<![CDATA[This study aims to analyze the legal reasoning of the Panel of Judges in Tax Court Decision Number PUT-010985.16/2020/PP/M.XB (2025) regarding the crediting of Input Tax on the construction of employee welfare facilities, and to evaluate the legal protection afforded to the Taxpayer. The study employs a normative-juridical method utilizing statutory, conceptual, and case-based approaches. The central issue concerns the interpretation of the phrase "having a direct relationship with business activities" as stipulated in Article 9 paragraph (8) letter b of the Value Added Tax Law. The dispute involves Input Tax amounting to IDR 170,794,605.00 related to the construction of employee housing and kitchen facilities for a plantation company located far from residential areas. The Panel of Judges upheld the tax correction, reasoning that the facilities constituted final consumption by employees and thus failed to meet the requirements for crediting Input Tax. The analysis reveals that, formally, this reasoning aligns with the characteristics of VAT as a consumption tax and affords procedural legal protection to the parties involved. However, substantive issues remain, as the operational function of the facilities, the company's geographical location, and the company's obligation to provide for worker welfare were not fully considered when determining the existence of a direct relationship with business activities. Therefore, clearer parameters and harmonization across legal regimes are required to ensure legal certainty, fairness, and the protection of Taxpayer rights.]]>
