Things to Consider Before Filing a Tax Dispute Resolution

Tax Dispute – Currently, Indonesia still implements a self-assessment tax collection system, which gives taxpayers the authority and trust to calculate, pay, and report their own tax obligations. Along with the full trust given to taxpayers in calculating their taxes, the functions of supervision, guidance, and education are the consequences that must be borne by the Directorate General of Taxes (DGT) to ensure tax administration in accordance with tax laws.

In the tax area, differences of opinion often arise due to differences in interpretation and interests between the DGT and taxpayers. It is acknowledged that many tax regulations tend to be open to interpretation and are in a gray area, resulting in different interpretations by both parties who have different interests.

These differences of opinion may occur under the following conditions:

1. differences in opinions regarding the legal basis that should be used;
2. differences in interpretation regarding a provision of tax regulations; and
3. proof of an opinion based on data or information used by taxpayers or DGT.

These reasons can cause the amount of tax determined by the DGT to differ from the amount calculated by taxpayers, leading to a tax dispute.

When Does a Tax Dispute Arise?

When taxpayers feel dissatisfied or feel that justice has not been served regarding a tax assessment issued. Disputes usually arise due to tax assessments made by the tax office through a tax examination process, confirmation of data (SP2DK), and other reasons. In the tax audit process, if taxpayers feel that the assessment is not in line with their situation, they can file an objection to the assessment.

Objections are submitted through the tax office, which is then processed by the regional tax office. This objection process is called a tax dispute. If the explanation of opinions and proof of the objection submitted by taxpayers is not accepted by the Regional Tax Office, taxpayers can file a tax dispute appeal to the Tax Court and even to the Supreme Court for a review of the Tax Court’s decision that is deemed to still not be in accordance with the provisions and evidence available.

Taxpayer Considerations Before Initiating a Tax Dispute Process

Before initiating the tax dispute process, taxpayers must consider the costs and benefits that can be obtained from filing a tax dispute.

Risks and costs:

1. The tax dispute settlement process takes a relatively long time, ranging from 2 to 5 years, during which taxpayers should be more focused on developing their businesses and ventures.
2. The risk of a 30% penalty for unpaid taxes if the objection is rejected by the DGT and a 60% penalty for unpaid taxes if the appeal is rejected by the Tax Court;
3. The need for competent personnel to represent taxpayers in the tax examination process is necessary to avoid misunderstandings that result in additional tax liabilities that should not occur.

Although it carries significant risks, many taxpayers still choose to file tax disputes because they consider the benefits of the tax dispute process, such as:

1. the self-assessment system is a system that trusts that what is reported by taxpayers is true.
2. the opportunity to correct tax assessments that are deemed inappropriate or incorrect;
3. the chance to defend their rights as taxpayers and obtain justice.

To pursue tax disputes, taxpayers should choose a trusted tax consultant so that the tax review process can run smoothly and professionally and also minimize the risks that may occur to the taxpayer. A good track record is the first thing that taxpayers should consider when determining a tax consultant who can help with the tax dispute process.