TAX RESTITUTION CONSULTATION
IN INDONESIA
In Indonesia, tax restitution refers to the process of returning or refunding taxes that have been overpaid or incorrectly paid by a taxpayer to the government. This typically occurs when a taxpayer has paid more taxes than they actually owe due to errors in tax calculations, misunderstandings of tax laws, or other reasons
The process of tax restitution in Indonesia involves filing a request or claim for refund with the tax authorities, providing supporting documentation to substantiate the overpayment, and undergoing a review or verification process by the tax authorities to determine the validity of the claim.
Once the tax authorities approve the claim for tax restitution, the excess amount is refunded to the taxpayer through various means, such as direct bank transfer or issuance of a tax credit for future tax obligations.
Tax restitution is an important aspect of tax administration in Indonesia as it ensures that taxpayers are not unfairly burdened with paying more taxes than they are legally required to, and it helps maintain trust and fairness in the tax system.
Taxpayers who are subject to restitution:
Based on the Minister of Finance Regulation Number 39/PMK.03/2018 as Last Amended by 209/PMK.03/2021:
1. Taxpayer of certain criterias
- Taxpayers that are on time in submitting tax returns
- Taxpayers who do not have tax arrears for all types of taxes
- Taxpayers who submit financial statements in a tax year that have been audited by a public accountant or government financial supervisory agency
- The taxpayer that has no criminal offense in the field of taxation
2. Taxpayer of specific terms
- Individual taxpayers who do not run a business, submit Annual Income Tax Return for overpayment of restitution
- Individual taxpayers conducting business or independent work, submitting Annual Income Tax Return for overpayment of restitution with a maximum overpayment amount of IDR 100 million
- Corporate taxpayers who submit Annual Income Tax Return overpaying restitution with a maximum overpayment amount of IDR 1 billion
- Taxable entrepreneurs (PKP) who submit VAT periodic tax returns overpaying restitution with a maximum overpayment amount of IDR 5 billion
2. Taxpayer Entrepreneur (Pengusaha Kena Pajak - PKP) of Low Risk Business
- Low-risk taxable entrepreneurs are granted refunds of VAT overpayments for each tax period.
To apply for a refund of excess tax payments, there are procedural requirements that must be complied with by taxpayers, which are:
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1. | Completing required documents of notice letter and its attachments |
2. | The correct records and calculations of tax obligations |
3. | The correct credits of tax based on the application system in Directorate General of Tax |
4. | The complete performance and records of tax obligations by the taxpayers |
The requirements must be submitted to the tax office where the taxpayer is registered and later await the tax office’s decision after the request for refund on tax restitution. It's important to note that the specific procedures and requirements for applying for tax restitution may vary depending on the circumstances of your case and the regulations enforced by the Indonesian tax authorities.
How Can We Help?
Initial Tax Analysis: Conducting an in-depth analysis of your tax records and financial situation to identify potential areas for tax restitution.
Strategic Planning: Developing a tailored strategy to optimize your tax refund potential, considering relevant tax laws and regulations in Indonesia
Expert Guidance and Submission: Providing expert guidance throughout the process of preparing and submitting your tax restitution claim, ensuring accuracy and compliance
We assist with the goals to acquire maximum tax restitution potential and to save both time and resources so our Client can be focused more in business development and activity
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Our dedicated team is ready to assist you and providing the necessary legal support to address your concerns in accordance with Indonesian law.
