The Cost of Total Disagreement: How PT LI Lost Its Right to Tax Interest Compensation 

PT LI Tax Dispute: Non-Retroactive Principle and Interest Compensation Under Article 27B KUP Law

The interest compensation dispute between PT LI and the Directorate General of Taxes (DGT) triggers a crucial debate on the non-retroactive principle and the material requirements of Article 27B KUP Law post-Omnibus Law. The core conflict arose when PT LI filed for interest compensation regarding an overpayment of VAT for the July 2016 period, which emerged following a 2022 Tax Court Decision. Despite winning the primary dispute, the DGT refused the compensation on the grounds that the Plaintiff did not agree to any corrections during the Closing Conference of the tax audit.

Regulatory Conflict: Article 27A vs. Post-Omnibus Law Regime

In its argument, PT LI emphasized that since the Tax Assessment Notice (SKPKB) was issued in 2018, the applicable regulation should be Article 27A KUP Law (old regime), which granted a fixed 2% monthly interest without requiring agreement during the audit. Conversely, the DGT insisted on applying Article 27B KUP Law because the court decision serving as the basis for the refund was rendered in 2022, after the Omnibus Law came into effect.

Judicial Ruling: Vested Rights and the Application of PMK 18/2021

The Board of Judges ruled that the right to interest compensation is a vested right that arises only when the court decision is pronounced, not at the time of the tax period. The Board affirmed that under Article 111 of PMK 18/2021, the procedures for granting interest compensation must follow the latest regulations if the decision is pronounced after November 2, 2020. Since PT LI did not agree to any corrections during the audit (claiming Rp0), the cumulative requirements for interest compensation were not met.

Strategic Implications: Consequences of a Zero Consent Stance

This decision carries serious implications for Taxpayers' litigation strategies. A "zero consent" stance or rejecting all corrections during an audit now entails the loss of economic value in the form of interest compensation, even if the Taxpayer is eventually proven correct at the appellate level. This necessitates Taxpayers to be more selective and calculative when giving consent during the Closing Conference.