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Tax Appeal Services

Written by Yeni on 09/08/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

Introduction

Disagreements or misunderstandings related to tax assessments often lead companies to seek remedies through the appropriate channels. To comply with the Directorate General of Tax, businesses must have a deep understanding of current regulations. This knowledge is crucial in reducing the risk of disputes and ensuring that any challenges are handled effectively, thereby safeguarding the company’s financial and legal standing.

Definition

A tax appeal is the final step taken by a taxpayer in resolving a tax dispute. If a taxpayer is not satisfied with the Decision Letter of Objection, they can file an appeal to the Tax Court. An appeal is a legal action taken by a taxpayer or tax insurer against a decision that can be appealed, based on applicable tax laws and regulations.

The Importance of Tax Appeal

Understanding and addressing tax disputes is crucial for several reasons:

Compliance: Ensuring adherence to regulations helps avoid legal penalties and administrative sanctions.
Financial Accuracy: Proper management of disputes ensures accurate financial reporting and prevents overpayment or underpayment of taxes.
Risk Management: Addressing issues promptly minimizes the risk of prolonged legal battles and additional fines.
Reputation: Maintaining a good standing with authorities preserves the company’s reputation and fosters trust with stakeholders.
Resource Allocation: Efficient management of disputes allows companies to focus resources on core business activities.

The Best Time to Engage in Tax Appeal Services

Engaging in tax appeal services is essential under the following circumstances:

Receiving Unfair Assessment: When a company deems a tax assessment unfair or incorrect.
Ongoing Disputes with the Authority: When there are unresolved issues regarding tax liabilities.
Completion of Disputes: When seeking to resolve ongoing disagreements efficiently.

Benefits of Tax Appeal Services

Engaging in tax appeal services offers several benefits:

Expert Guidance: Access to professional advice and expertise in navigating complex tax regulations.
Efficient Dispute Resolution: Streamlines the process of resolving tax disputes, saving time and resources.
Legal Representation: Provides legal representation and support during tax disputes, enhancing the chances of a favorable outcome.

The Process of tax Appeal

Terms of Applications

Eligibility: Taxpayers may file an appeal only to the tax court on the Decision Letter of Objection.
Submission: The application must be submitted in writing in the Indonesian language with clear reasons, no later than three months from the date the Decision Letter of Objection is received. It must be accompanied by a copy of the Decision Letter of Objection.
Single Decision: For each Decision Letter of Objection, only one Letter of Appeal should be submitted.

The Applicant Party

Eligible Parties: An appeal may be filed by a taxpayer, their heirs, an administrator, or their legal representative.
Continuation of Appeal: If the appellant dies during the appeal process, the appeal may be continued by their heirs, the legal counsel of the heirs, or the guardian if the appellant goes bankrupt.
Corporate Changes: If the appellant undergoes a merger, consolidation, business split/expansion, or liquidation during the appeal process, the application may be continued by the party responsible for the said changes.

How We Can Help

Putranto Alliance’s registered tax consultants and attorneys offer thorough support in handling tax disputes, ensuring your company is well-prepared and effectively represented. Here’s how Putranto Alliance can assist:

Data Review: Carefully examine your financial data, journals, and reports to pinpoint any discrepancies and areas of concern.
Issue Anticipation: Identify potential issues in advance and advise on the necessary data requirements to strengthen your case.
Advisory Services: Providing expert guidance on filing an appeal and offering comprehensive advisory services to help navigate complex regulations.
Representation: Advocating for your company’s interests during disputes, whether in Tax Court or in discussions with the Tax Authority.
Clear Communication: Maintaining open and consistent communication to ensure your case is managed efficiently and represented effectively.

FAQs

What are the most common reasons companies file tax appeals?

Common reasons include disagreements over tax assessments, incorrect application of tax laws, misinterpretations of financial data, or disputes over tax credits and deductions.

What are the stages in tax disputes?

The stages in tax disputes include:

Receiving an underpayment tax assessment.
Filing a request for objection to the DGT .
If the objection is accepted, the taxpayer does not need to pay the underpayment tax assessment.
If the objection is rejected, the taxpayer can file an appeal to the tax court.
If the appeal is rejected, the taxpayer can file a judicial review.

What happens if a company loses its tax appeal in court?

If a company loses its tax appeal, it may be required to pay additional penalties, including a percentage of the tax payable, and any interest accrued during the dispute. The decision is usually final, although there might be limited options for further legal recourse.

What happens if an appeal is revoked?

If an appeal is revoked, it is removed from the list of disputes. A revoked appeal cannot be resubmitted.

What are the potential costs involved in filing a tax appeal?

Costs can include legal fees, court fees, and potentially, additional penalties or interest if the appeal is unsuccessful. It’s important to weigh these costs against the potential benefits of filing the appeal.

Can you give an example of tax dispute and settlement?

PT ABC received an Underpayment Tax Assessment Letter (SKPKB) for income tax payable, foreign tax credit (WHT 24), and VAT amounting to 4.5 billion rupiahs for the 2021 fiscal year in June 2022. PT ABC was also subject to administrative sanctions in the form of interest amounting to 500 million rupiahs, making the total payable 5 billion rupiahs. PT ABC conducted an internal tax audit and submitted an objection letter in August 2022 to the Directorate General of Taxes. The objection letter addressed the contents of the tax assessment letter, including the amount of profit/loss, tax amount, and improper tax withholding or collection. PT ABC provided calculations and supporting documents to substantiate their claims. The Directorate General of Taxes must decide on the objection within 12 months from the date the objection letter is received. If no decision is made within this period, the objection is granted. If the objection is rejected, the taxpayer is subject to a 30% fine on the tax payable. If dissatisfied with the objection decision, taxpayers can file an appeal to the tax court. The taxpayer must prepare evidence and fulfill court summons. The court examines the appeal and renders a decision. If the appeal is rejected, the taxpayer is subject to a 60% penalty on the tax payable.

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