Tax disputes in Indonesia are multi-staged, starting from audits and possibly escalating to the Supreme Court. Each step in the process requires a keen understanding of Indonesian tax regulations and procedures. Kusuma & Partners stands ready to assist clients at every stage of their tax dispute, ensuring their rights are protected, and the best possible outcome is achieved. We provide professional yet approachable guidance through Tax Audit, Tax Objection, Tax Appeals, Tax Lawsuit, and Tax Judicial Reviews, delivering peace of mind during complex tax matters.
The tax dispute process often begins with a Tax Audit, initiated by the Indonesian Tax Authorities (Direktorat Jenderal Pajak, DJP). A tax audit is typically conducted when discrepancies or potential non-compliance issues are detected in a taxpayer’s filing. This audit examines tax returns, financial statements, and other relevant documents.
Procedure:
When a taxpayer disagrees with the results of a tax audit, they can file a Tax Objection to challenge the assessment. This is a formal request for the tax authority to re-examine the audit’s conclusions.
Procedure:
If the taxpayer is dissatisfied with the outcome of the Tax Objection, they have the right to escalate the matter by filing a Tax Appeal with the Tax Court.
Procedure:
A Tax Lawsuit may be filed when a taxpayer challenges administrative decisions made by the tax authorities, which are not necessarily related to assessments, such as a refusal to issue a refund or an improper tax collection.
Procedure:
The final step in resolving a tax dispute is a Tax Judicial Review before the Indonesian Supreme Court (Mahkamah Agung). This step is typically taken after all previous legal avenues, including appeals and lawsuits, have been exhausted, and is pursued when there are substantial legal errors in the lower courts’ rulings.
Procedure:
How long does it take to process a tax refund?
The processing time for a tax refund can vary. Generally, it may take few months, depending on the complexity of your claim and the completeness of your documentation.
Can I apply for a tax refund if I have unpaid taxes from previous years?
You may still be eligible for a tax refund even if you have unpaid taxes from previous years. However, the DJP may offset your refund against any outstanding tax liabilities. It’s important to address any unpaid taxes with the DJP to ensure a smooth refund process.
Is it possible to receive a tax refund in foreign currency?
Typically, tax refunds are issued in Indonesian Rupiah (IDR).
What is the deadline for applying for a tax refund?
There is generally a statute of limitations for filing a tax refund claim, typically within a few years from the end of the fiscal year in which the overpayment occurred. It’s important to file your claim promptly to avoid missing the deadline.
What are General Corporate services??
General Corporate services encompass assistance with day-to-day business operations, including corporate structuring, compliance with local laws, regulatory matters, and corporate governance.
What is the scope of Legal Advisory in Indonesia?
Legal Advisory includes offering expert opinions on Indonesian law, helping businesses navigate legal complexities, and providing strategic guidance for minimizing risks in transactions or operations.
Why is Legal Compliance important in Indonesia?
Legal Compliance ensures that your business follows applicable laws and regulations in Indonesia, helping avoid legal disputes, penalties, and potential shutdowns due to non-compliance.
How can you help with company formation in Indonesia?
We assist with setting up different types of companies, such as PT PMA, PT PMDN, Representative Offices (RO), Permanent Establishment (PE), ensuring that your business structure complies with Indonesian corporate laws.
How often should companies conduct a legal compliance review?
It is recommended to conduct a legal compliance review regularly or when there are significant regulatory changes, ensuring the business continues to operate within the bounds of Indonesian law.
What happens if a company fails to meet legal compliance standards?
Failure to comply can result in penalties, legal disputes, or suspension of business activities. Staying compliant helps safeguard your business from these risks.
What should businesses know about labor law compliance in Indonesia?
Businesses need to comply with labor laws concerning employment contracts, employee rights, and benefits. We ensure your HR practices align with Indonesian labor regulations.
Employers are required to register their employees with BPJS (Badan Penyelenggara Jaminan Sosial) for health and employment benefits, including health insurance, old-age benefits, work accident protection, and death insurance. The contributions are shared between the employer and the employee.
If a company needs to terminate employees due to economic difficulties, it must follow the procedures outlined in Government Regulation No. 35 of 2021. This includes attempting to negotiate mutual agreements, paying severance packages, and ensuring compliance with the labor law before proceeding with termination.
Employing foreign workers requires specific permits, including a Work Permit (IMTA) and a temporary stay permit (KITAS). Employers must also provide a clear reason why the position cannot be filled by an Indonesian worker and ensure the foreign worker’s role aligns with approved positions under the Ministry of Manpower’s regulations.
It is advisable to begin the renewal process 30 to 60 days before your KITAS expires to allow sufficient time for processing.
Why choose arbitration over traditional litigation?
Arbitration is often chosen for its confidentiality, flexibility in procedure, and the ability to select arbitrators with expertise in the subject matter of the dispute.
What types of disputes are suitable for arbitration in Indonesia?
Commercial disputes
What are the costs associated with arbitration in Indonesia?
It includes administrative expenses of the arbitral institution, arbitrators’ fees, legal fees, and other expenses related to the proceedings.
How to enforce arbitration awards to make it legally binding and force in Indonesia?
The arbitration awards shall be registered in Indonesian court maximum 30 (thirty) days after the award is issued, and then shall obtain a court approval.
Can the Indonesian arbitration awards be challenged or cancelled in Indonesian courts?
Yes, under certain circumstances.
What is the legal remedy if an arbitration award is cancelled by Indonesian court?
Filing an appeal to Indonesian Supreme Court.
What happens if one party refuses to participate in arbitration proceedings in Indonesia?
If one party refuses to participate in arbitration proceedings in Indonesia, the arbitral tribunal may proceed with the arbitration and make a decision based on the evidence and arguments presented by the participating party.
What is a Company Registry document?
A Company Registry document is a formal record by Indonesian Ministry of Law and Human Rights that contains key information about a registered company in Indonesia, such as its legal name, address, shareholders, and directors.
Why is it important to check a company’s background before doing business?
Conducting a background check helps you verify a company’s legitimacy and legal standing, minimizing risks and ensuring trustworthiness.
What information can be obtained from a Company Registry search?
You can obtain details like the company’s legal status, registration number, shareholders, board of directors, authorized capital, and business activities.
What should I do if a company’s registry details seem suspicious?
Consult with our lawyers immediately to investigate further and ensure that all necessary legal actions are taken to protect your interests.
Is it possible to check whether a company has legal disputes or cases against it?
Yes, it needs further investigation.
Can I check the history of changes in a company’s structure?
Yes.
What types of company can I conduct background checks?
It is for foreign-owned company in Indonesia (PT Penanaman Modal Asing (PT PMA) and local company in Indonesia (PT PMDN).
