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Tax Objection Service

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

Tax disputes and objections are common challenges faced by companies, often arising from misinterpretations of complex regulations. As the Directorate General of Tax enforces strict compliance, it is crucial for businesses to stay well-informed and fully understand the latest tax laws. A proactive approach to compliance not only minimizes the risk of disputes but also strengthens a company’s position in addressing any potential challenges that may arise.

Definition

An objection arises when a taxpayer disputes or disagrees with an assessment issued by the authorities or with the withholding/collection conducted by a third party. This allows the taxpayer to formally challenge the imposed obligations, often resulting from discrepancies in calculations or interpretations of regulations. The process involves the taxpayer presenting evidence and arguments to support their position, aiming to resolve the disagreement in a manner consistent with the enforcement of laws and regulations.

The Importance of Tax Objection Service

Understanding and addressing objections is crucial for companies to ensure compliance with regulations and to avoid potential disputes with authorities. Misunderstandings or misinterpretations of tax laws can lead to significant financial and legal consequences. Properly managing disputes helps in maintaining good standing with tax authorities and avoiding penalties.

Here are some of the key reasons why addressing objections is important:

Protects Financial Interests: Filing an objection allows companies to challenge and correct any inaccuracies in assessments, potentially reducing or eliminating undue liabilities.
Prevents Escalation of Disputes: By resolving disagreements at the objection stage, companies can avoid prolonged disputes with authorities, which can be costly and time-consuming.
Safeguards Company Reputation: Successfully managing objections demonstrates a company’s commitment to compliance, enhancing its reputation with authorities and other stakeholders.

The Best Time to Perform Tax Objection Service

The best time to address disputes is immediately upon receiving an assessment that the taxpayer disagrees with. Timely action ensures that the objection is filed within the stipulated period and that all necessary documentation and evidence are gathered to support the case.

Benefits of Using Tax Objection Service

Effectively managing objections provides several key benefits that can protect a company’s financial health and legal standing.

These include:

Avoidance of Penalties: Properly addressing disputes can prevent the imposition of penalties and interest on disputed amounts.
Financial Savings: Successfully contesting an incorrect assessment can result in significant financial savings for the company.
Legal Compliance: Ensuring that objections are handled correctly helps maintain compliance with laws and regulations.

How to Engage in Tax Objection

Engaging in tax objection may require several steps as follows:

Submitting a Tax Objection:
Based on UU KUP Article 25, taxpayers can propose a tax objection only to the Directorate General of Taxation for:
- Underpayment Tax Assessment Letter (SKPKB);
- Additional Underpayment Tax Assessment Letter (SKPKBT);
- Overpayment Tax Assessment Letter (SKPLB);
- Zero Tax Assessment Letter (SKPN);
- Withholding or collecting taxes by third parties based on the provisions of tax laws and regulations.
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. If there are reasons for the objection other than the material or content of the tax assessment letter or withholding or collection of taxes, those reasons are not considered in the settlement of the objection.
For the general requirements regarding submission of tax objection, refer to the FAQ section.
Objection Settlement Flows:
- Collecting Data
  In the process of settling objections, the Director General of Taxes is authorized to:
  - Borrow books, records, data, and information in hardcopy and/or softcopy form from Taxpayers related to the disputed material by submitting a request letter for borrowing books, records, data, and information;
  - Ask the Taxpayer to provide information related to the disputed material through the submission of a letter of request for information;
  - Request information or evidence related to the disputed material from third parties who have a relationship with the Taxpayer through the submission of a letter of request for data and information to a third party;
  - Review the place of the Taxpayer, including other necessary places;
  - Conduct discussion and clarification of the necessary matters by summoning the Taxpayer through the submission of a summons;
  - Conduct examinations for other purposes in the context of objections to obtain objective data and/or information that can be used as the basis for considering the objection decision.
- Conclusion by DGT.
  The Directorate General of Taxes will analyze the collected data and issue a comprehensive report on the outcome of the objection settlement.
Reporting of Objection Settlement Result:
DGT will issue a report containing the result of the decision regarding the objection.
The decision is categorized as follows:
- Accepted in whole / in part;
- Rejectedl;
- Add payment.

How We Can Help

Navigating the complexities of objections requires specialized expertise and a strategic approach. Putranto Alliance’s team of seasoned tax professionals is dedicated to assisting companies in effectively managing disputes to safeguard their interests.

Our comprehensive services include:

Consultation and Advisory: Providing expert advice on tax regulations and the objection process.
Documentation Assistance: Helping in the preparation and submission of necessary documents for filing objections.
Representation: Representing companies in discussions and clarifications with tax authorities.
Follow-up and Monitoring: Ensuring timely follow-up and monitoring of the objection process to achieve a favorable outcome.
Training and Workshops: Conducting training sessions and workshops to educate company staff on tax regulations and the objection process.

FAQs

What is the time limit for submitting a tax objection?

A tax objection must be submitted within three months from the date the tax assessment letter is sent or from the date of withholding or collecting taxes by third parties.

Can a taxpayer file multiple objections for different tax assessment letters?

No, one objection must be filed for each tax assessment letter, tax withholding, or tax collection.

What happens if the objection is not resolved within twelve months?

If the Director General of Taxes does not make a decision within twelve months, the objection is deemed approved, and a Decision on Objection must be issued within one month after the twelve-month period ends.

Can a taxpayer revoke an objection after it has been submitted?

Yes, a taxpayer can revoke the submission of an objection before the date of receipt of the notification letter to attend (SPUH) by submitting a written application.

What are the consequences of revoking an objection?

If an objection is revoked, the taxpayer is deemed not to have filed an objection, and the tax still to be paid becomes payable from the date of issuance of the SKP.

What happens if a taxpayer does not respond to the first request for borrowing or providing information within the specified fifteen working days?

If the taxpayer does not respond within fifteen working days, the Director General of Taxes will issue a second loan request letter or a second letter of inquiry to the taxpayer.

What is the consequence if the Director General of Taxes does not make a decision on a taxpayer’s objection within the twelve-month period?

If the Director General of Taxes fails to make a decision within the twelve-month period, the taxpayer’s objection is deemed approved, and the Director General of Taxes must issue a Decision on Objection within one month after the twelve-month period ends.

What are the general requirements for submitting a tax objection?

The general requirements for submitting a tax objection are as follows:

The objection must be submitted in writing in Indonesian.
It must state the amount of tax payable, withheld, or collected, or the amount of loss according to the taxpayer’s calculation, along with the reasons for this calculation.
Only one objection can be filed for each tax assessment letter, tax withholding, or tax collection.
The taxpayer must have paid at least the amount agreed upon during the final discussion of audit or verification results before submitting the Objection Letter.
The objection must be submitted within three months from the date the tax assessment letter was sent.
The Objection Letter must be signed by the taxpayer. If signed by a representative, a special power of attorney must accompany it, as per Article 32 paragraph (3) of the KUP Law.
Taxpayers should not submit applications as referred to in Article 36 of the KUP Law.

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