<![CDATA[Abstract: The disharmony in transaction recognition between Value Added Tax (VAT), Income Tax (PPh), and PSAK 72 has created differences in the timing of transaction recognition, affecting taxpayers’ tax obligations. In business practices, particularly in installment- or milestone-based contracts, taxpayers are often required to issue tax invoices before receiving payment from service recipients, resulting in the obligation to remit VAT prior to obtaining actual economic benefits. This condition may lead to liquidity constraints and expose taxpayers to administrative sanctions for late tax payments. This policy brief aims to analyze the impact of such disharmony on the application of administrative sanctions and fiscal fairness for taxpayers. The study employs a descriptive-analytical method with a normative juridical and policy analysis approach through a literature review of tax regulations, accounting standards, and relevant academic literature. The findings indicate that differences between the legal-formal approach of tax regulations and the economic-substance approach of PSAK 72 create a timing mismatch that may undermine fiscal fairness when taxpayers are subject to administrative sanctions despite not having received payment from service recipients. Therefore, policy reforms are needed through the establishment of a more objective mechanism for the reduction or cancellation of administrative sanctions and the adoption of a reasonable cause approach to enhance legal certainty and fiscal fairness within the Indonesian tax system.]]>
