PPh Article 25 Installment Cancelled If Corporate Income Tax is Paid Off? A Case Study of PT AH's Lawsuit Against the DGT

In a dispute challenging a Decision of the Director General of Taxes (DGT), the Tax Court has provided important jurisprudence regarding the hierarchical status of Income Tax (PPh) Article 25 as an advance payment installment of Corporate Income Tax.

Based on Decision Number PUT-011553.99/2024/PP/M.IXA Tahun 2025, the Panel of Judges granted the Taxpayer's (PT AH) entire lawsuit against the rejection of the request to cancel the principal amount of the Tax Bill (STP) for PPh Article 25. This case originated from an underpayment of the PPh Article 25 installment for the July 2023 Tax Period, triggered by the 1st Amendment of the Corporate Income Tax Annual Tax Return (SPT) for the 2022 Tax Year.

The core conflict centered on the nature of PPh Article 25 itself.

The DGT insisted that the PPh Article 25 underpayment must be billed through an STP in accordance with Article 14 paragraph (1) letter a of the General Provisions and Tax Procedures Law (UU KUP). The DGT's argument was formal, asserting that the PPh Article 25 obligation is calculated monthly and its determination is based on the correct calculation from the previous year's Annual SPT. Therefore, the resulting underpayment was considered a valid tax debt.

However, the Taxpayer countered with a substantive argument that PPh Article 25 merely functions as a tax credit and an installment to settle the actual tax due (PPh Article 29) at the end of the Fiscal Year (Article 12 paragraph (1) UU KUP).

The key point that won the case was the evidence that the Taxpayer had settled the entire PPh Article 29 for the 2023 Tax Year before submitting the Annual SPT. This action effectively nullified the relevance of the PPh Article 25 principal amount billed mid-year, as the purpose of the advance payment (tax credit) had already been achieved.

The Panel of Judges agreed with the Taxpayer, affirming that maintaining the PPh Article 25 principal amount in the STP—which had already been settled by PPh Article 29—would lead to an overpayment and violate the principles of legal certainty and tax fairness.

Since the principal amount of the STP was deemed incorrect (error in substance), the Panel exercised its authority under Article 36 paragraph (1) letter c of the KUP Law to cancel the STP principal, resulting in a Nil amount. Nevertheless, the administrative penalty in the form of interest under Article 14 paragraph (3) of the KUP Law was maintained because the Taxpayer acknowledged the initial delay in payment. This Decision underscores that the Tax Court will prioritize the substance and legal purpose of Corporate Income Tax over the formality of installment billing.

A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here