Category: Tax & Accounting
Written by Yeni on 16/09/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.
The government, through the Directorate General of Tax, enforces tax compliance of taxpayers. Tax audits and tax disputes in the form of tax objections and tax appeals frequently occur in companies because of misperceptions in understanding tax regulation. To avoid this misperception, companies should understand the latest tax regulation to avoid the risk of tax disputes.
Tax audit refers to a series of activities of collecting and processing data, information, and/or evidence objectively and professionally according to auditing standards to assess tax compliance and/or for other purposes in the context of enforcing tax laws and regulations.
In addition, tax objection is a form of legal effort should there is disapproval or disagreement of the tax assessment on a deduction/collection by third parties, the amount of loss, or the amount of tax payable. The taxpayer can then file an objection.
Should the taxpayer is still not satisfied with the Decision Letter of Objection to the objection he submitted, the taxpayer can file an appeal to the Tax Court. An appeal is a legal action that can be taken by a Taxpayer or Tax insurer against a decision that can be appealed based on the applicable tax laws and regulations.
Based on PMK number 17/PMK0.3/2013 on Tax Audit Procedures, there are two types of tax audit:
A tax audit’s purpose is to verify taxpayers’ tax compliance and for other purposes in implementing tax laws and regulations. In general, there are two kinds of tax audits:
A tax audit starts with receiving a Notice of Field Audit or complying in case of an office audit. The tax audit results must be notified and delivered to the taxpayer through a Notice of Tax Audit Findings enclosing a list of the audit findings and the legal basis for the findings. The audit can be done online in special cases, such as during a pandemic.
A tax compliance audit ends with an Audit Report and a legal product that could be in the form of:
The audited taxpayer has the rights to:
The audited taxpayer has the obligation to:
Based on UU KUP article 25, taxpayers can propose a tax objection only to the Directorate General of Taxation for:
The term of filing an objection based on Article 25 number (2), (3), (4) UU KUP, as follows:
If the terms are not fulfilled, the objection submitted is not considered. In addition, a taxpayer should pay off the tax payable at least an amount that the taxpayer has approved before submitting the letter of objection.
Taxpayers can only file an objection to the material or content of the tax assessment letter, which includes the amount of loss based on the provisions of tax laws and regulations, the amount of tax, or the material or content of withholding or collecting taxes.
Suppose there are reasons for the objection other than the material or content of the tax assessment letter or withholding or collection of taxes. In that case, those reasons are not considered in settlement of the objection.
The longest settlement period of tax objection is 12 (twelve) months from the date of the letter of objection accepted, and DJP has to decide. The objection letter is considered approved if the DJP does not decide by that period.
When a submitted objection is rejected, but a company is still not satisfied with the decision letter of objection, a company can take a tax appeal.
Below are the terms to submit an appeal:
A company needs service-related tax objections, tax audits, and tax appeals when they receive an unfair tax assessment or get tax disputes with Tax Authority. Moreover, a tax service assists a company in tax compliance, tax planning, tax auditing, tax restitution, and the completion of a tax dispute.
The Tax Authority has been tough on enforcing tax compliance. This results in an increasing number of tax audits and tax disputes. A good understanding of Tax and Company Law and awareness of the time frame to lodge an objection or an appeal are crucial when dealing with such a situation. As with any court case in Indonesia, case settlements in tax disputes usually drag on for months. Our registered tax consultant and tax attorney can help to represent and communicate your point of view during such tax disputes.
We strive to maintain good cooperation and seamless communication with the client so that the case can be properly represented in the Tax Court or the Tax Authority. We anticipate problems, advise clients on the relevant data requirements, and provide recommendations and guidance for your case. We will carefully review your data, journals, and tax reports in such engagements.
Thank you for sharing
Subscribe to our newsletter
Subscribe to our newsletter to get the latest information about the laws & regulations in Indonesia.