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:
A tax dispute occurs when there is a disagreement between the taxpayer and the Indonesian Tax Authorities (Direktorat Jenderal Pajak, DJP) regarding tax assessments, tax payments, or the interpretation of tax regulations. Disputes commonly arise after a tax audit when the taxpayer disagrees with the findings of the DJP.
During a tax audit, the tax authority reviews your financial records and tax filings to ensure compliance. If discrepancies are found, they will issue a notice of their findings.
You can file a Tax Objection within three months of receiving the audit results. This is your formal request for the tax authority to re-examine their decision.
If your objection is rejected, you can escalate the matter by filing a Tax Appeal with the Tax Court within three months of receiving the rejection.
A Tax Lawsuit challenges administrative actions by the tax authority that are unrelated to assessments, such as disputes over tax refunds or collections.
A Tax Judicial Review is the final legal step, brought before the Supreme Court to correct substantial legal errors made by the Tax Court. This is done only after exhausting all other avenues.
While negotiation is possible, formal out-of-court settlements are rare in Indonesian tax disputes. Our professional advice is crucial to exploring your options.
The outcomes of a tax objection can be varied. The tax authority may fully accept, partially accept, or reject your objection, depending on the strength of your argument and evidence provided.
The tax authority typically takes 12 months from the date of filing to issue a decision on a Tax Objection. If no decision is made within this time, the objection is considered rejected by law.
Yes, settling your tax liabilities during the dispute process is possible. However, this may impact the progression of the dispute. Consulting with a tax professional like our firm is advised before making any settlement decisions.
Common reasons for a Tax Judicial Review include substantial legal mistakes in the lower courts’ rulings, misinterpretation of tax laws, or procedural violations that affected the fairness of the judgment.
Penalties can include fines, interest charges, and administrative sanctions depending on the nature of the dispute. If a tax deficiency is found, additional penalties may apply for late payments or underreporting.
A Tax Lawsuit must be filed within 90 days of the administrative action you are challenging (such as a refusal of a refund). Missing this deadline can result in the dismissal of your lawsuit.
You can challenge decisions such as denial of tax refunds, incorrect tax collections, or penalties imposed outside of a tax assessment.
If you win, the court may order the tax authority to revise or cancel their previous decision. This could result in a refund, removal of penalties, or a corrected tax assessment.
No, deadlines for filing Tax Objections and Tax Appeals are strictly enforced under Indonesian tax law.
In Indonesian tax disputes, the burden of proof lies with the taxpayer. You must provide evidence and documentation that supports your claim against the tax authority’s assessment or decision.
If you fail to provide enough evidence, the tax authority or the Tax Court may rule in favor of the government. Therefore, it is crucial to present a well-prepared and substantiated case.
While a tax dispute is ongoing, it may cause financial uncertainty. However, unless there are severe violations, the tax authority generally does not halt business operations during the dispute. Consulting with tax professionals like our firm can help mitigate risks.
Informal negotiations or discussions can sometimes lead to clarification or resolution before entering the formal dispute resolution process. However, once a decision has been made, formal procedures are required to challenge it.
