Tax Resolution Services

Written by Reyhan Adam Himawan on 16/07/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

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Introduction

Tax resolution refers to the process of resolving tax-related issues between a taxpayer and a tax authority. Tax resolution is aimed at helping taxpayers resolve their tax problems and achieve a sustainable solution that satisfies both the taxpayer and the tax authority. 

Through this article, we hope you will learn more about tax resolution, the details about tax offenses in Indonesia, the types of fines, the resolution methods, and the benefits of using tax resolution services.

Definition

Tax resolution service is a service that tax experts offer to taxpayers to help them resolve their tax issues with the relevant tax authorities.

The objective of the tax resolution service is to facilitate the resolution of tax issues in an equitable manner from both the perspective of tax authorities and taxpayers, as well as to lessen the financial burden taxpayers bear.

The Importance

Taxation is a complex system whose implementation does not preclude the potential of taxpayers committing errors or failing to meet their duties. A violation of tax obligations is an act of infringing, resisting, or breaching legal norms in the form of obligations that taxpayers must carry out following the requirements of tax legislation. Based on the explanation of article 38 of the General Provisions of Taxation Lawicon for new tab, tax offenses are divided into two, namely:

  1. Administrative Offenses
    • Administrative offenses are infractions of taxpayers’ tax duties concerning tax administration actions. Violation of the administrative act of taxation is subject to administrative sanctions. Administrative sanctions consist of the following:
      • Administrative Fines: Imposed for issues such as late submission of tax returns, untruthfulness in actions, late creation of tax invoices, rejected objection applications, and termination of criminal offenses at the request of the Minister of Finance.
      • Interest: Imposed for issues such as self-rectification of tax returns resulting in greater tax debt, late payment of taxes, tax deficiencies after audits, and deferred payment of taxes.
      • Increase in the Amount of Tax Payable: Imposed for issues such as underpayment from untruthful tax returns, non-submission of tax returns, new data resulting in additional taxes, and non-fulfillment of obligations under articles 28 and 29.
  2. Criminal Offenses
    • Criminal offenses are violations of tax obligations the taxpayer commits regarding a criminal act in the field of taxation. Violations of criminal acts in the field of taxation are subject to criminal sanctions in the form of jail time and/or financial penalties. Criminal tax sanctions are divided into two:
      • Criminal Sanctions for Negligence Acts: Given to taxpayers who, due to negligence, do not submit the tax return or submit incorrect or incomplete information, potentially causing state revenue losses. The fine ranges from 100% to 200% of the unpaid or underpaid tax or imprisonment for three months to one year.
      • Criminal Sanctions for Intentional Acts: Imposed on taxpayers who intentionally commit acts such as not registering for a Taxpayer Identification Number, submitting false tax returns, refusing audits, and not depositing withheld taxes. The fine ranges from 200% to 400% of the unpaid or underpaid tax or imprisonment for six months to six years.

The Best Time To Do

The best time to engage in tax resolution services is as soon as a taxpayer identifies a potential issue or receives a notice from the tax authority. Early intervention can prevent the escalation of problems and reduce the severity of penalties. Specific scenarios include:

  1. Upon Receiving a Notice from Tax Authorities: Immediate action can help address the issue before it worsens.
  2. When Facing Financial Hardship: If a taxpayer is unable to pay taxes due to financial difficulties, seeking tax resolution services can help negotiate payment plans or other relief options.
  3. Before Filing Tax Returns: Consulting with tax resolution experts before filing can help identify and correct potential errors, avoiding future complications.
  4. When Discrepancies are Identified: If a taxpayer notices discrepancies in their tax filings, addressing them promptly can prevent further issues.

How to/The Process

Indonesian tax laws and regulations provide several tax resolution mechanisms that taxpayers can use to solve problems that may arise between taxpayers and tax authorities. The available tax resolution mechanisms include:

  1. Voluntary Revision
    • If the taxpayer realizes that there is an error in filling out the tax return that has been submitted, the taxpayer has the right to correct it based on their own will. The condition is that the tax authority has not started any tax audit action. If there is a larger tax debt due to the correction of the tax return, interest sanctions will be imposed.
  2. Voluntary Disclosure
    • The taxpayer, with their awareness, can disclose the inaccuracy of the submitted tax return in a separate report if the tax authority has audited it. The disclosure of untruth must be carried out before the issuance of a notification letter of audit results. Following that, the audit process continues to prove the report’s veracity.
  3. Reduction or Removal of Sanctions
    • The Director General of Taxes, by position or based on the taxpayer’s application, can reduce or remove administrative sanctions in the form of fines, interest, and tax increases owed following the provisions of tax legislation if the sanctions are imposed due to the taxpayer’s incomprehension of tax regulations or not due to their fault. The application for the reduction or elimination of administrative sanctions can only be submitted twice.
  4. Installment or Delay in Payment of Taxes
    • If the taxpayer experiences liquidity difficulties or circumstances beyond their control, making them unable to fulfill tax obligations on time, the taxpayer can apply to pay an installment or postpone the payment of taxes owed based on the Annual Income Tax Return, Tax Return Payable, STP, SKPKB and SKPKBT, Objection Decree, Rectification Decree, Appeal Decision, and a Review Ruling. The taxpayer must provide a guarantee of tangible assets with the following criteria:
      • Tangible assets that belong to the tax insurer which can be proven by proof of ownership of the assets.
      • Tangible assets that are not currently used as collateral for the debt of the tax insurer.
    • Delays or installments can be given by the tax authority no later than 24 months from the issuance of the decision or until the deadline for submitting the Annual Tax Return.
  5. Diversion Program
    • If the taxpayer has conducted a tax criminal audit, the taxpayer can willingly disclose the untruthfulness of their actions with a written statement, either for not submitting the tax return or submitting the tax return with incorrect or incomplete content or attachment, either intentionally or due to negligence, as long as the investigation has not been notified to the public prosecutor through the investigator. The sanction for disclosure of untruthfulness involves paying the amount of tax owed and an administrative fine of 100% of the amount of underpaid tax.
    • In the interest of state revenue, at the request of the Minister of Finance, the attorney general may stop the investigation of criminal acts in the field of taxation. Termination of the investigation may be carried out if the taxpayer or suspect has paid off:
      • Losses on state revenues as referred to in Article 38 plus administrative sanctions in the form of fines of 100% of the amount of losses on state revenues.
      • Losses on state revenues as referred to in Article 39 plus administrative sanctions in the form of fines of 300% of the amount of losses on state revenues.
      • The amount of tax in the tax invoice, proof of tax collection, proof of withholding tax, and/or proof of tax deposit as referred to in Article 39A plus administrative sanctions in the form of a fine of 400% of the amount of tax in the tax invoice, proof of tax collection, proof of withholding tax, and/or proof of tax deposit.
    • If the tax criminal case has been transferred to the court, the defendant can still pay off the state losses as described above, and the repayment is considered for prosecution without the imposition of imprisonment.
  6. Tax Objections and Appeals
    • Tax authorities can conduct audits to test taxpayer compliance in fulfilling their tax obligations. In its implementation, taxpayers can approve or refute the tax audit results. The tax authority will issue a decree upon completion of the tax inspection. If the taxpayer disagrees with the decree, they can file an objection with the tax authority and appeal to the tax court.

How We Can Help

Tax is complex and does not rule out the possibility of taxpayers making mistakes. According to tax provisions, those mistakes are a severe issue that can be subject to administrative or criminal sanctions. The possibility of imposing sanctions or sanctions for mistakes made will make taxpayers mentally and financially stressed. 

Putranto Alliance offers tax resolution services to help solve tax problems. With extensive experience in tax resolution, Putranto Alliance can provide advice on the best steps to take or accompany taxpayers during the tax audit period.

FAQs

If the Directorate General of Taxes does not respond to the application for delay or installment within 7 days, the application is deemed approved. Approval must be issued no later than 5 days after the initial 7 days.
The value of the assets used as collateral must be equal to the value of the tax debt submitted for delay or installment of payments.
Tax audits can vary in duration. An office audit can last between four to six months. On the other hand, field audit can last between six to eight months.
Putranto Alliance offers a range of tax resolution services, including Tax Audit Assistance (Office Audit, Field Audit, or Field Audit with transfer pricing transaction), Tax Objection Assistance, and Tax Attorney for Tax Appeals.
Putranto Alliance guarantees the security and confidentiality of the data provided during and after the financial due diligence process. We adhere to international standards set by ISO 27001 Information Security Management System and its extension ISO 27701 Privacy Information Management System. Our implementation of these frameworks ensures the effective protection of sensitive information through strong security measures and privacy controls.

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