PPh Article 25 STP Cancelled! The Key to Taxpayer Victory When Year-End PPh is Already Paid

Tax Court Decision Number PUT-011552.99/2024/PP/M.IXA Tahun 2025 provides a crucial juridical affirmation regarding the status and validity of the Tax Collection Letter (STP) for Income Tax (PPh) Article 25 when the Taxpayer has fulfilled the actual tax liability at the end of the fiscal year (PPh Article 29). In the lawsuit filed by PT AH, the dispute centered on the Director General of Taxes' refusal to cancel the principal amount of the STP arising from an underpayment of the PPh Article 25 installment for the April 2023 Tax Period, which was calculated based on the 1st Amendment of the 2022 Annual PPh Corporate Tax Return (SPT). The principle of self-assessment and the function of PPh Article 25 as merely an installment became the core of the legal objection analysis.

The main conflict began with the Taxpayer's action to amend the 2022 Annual Corporate PPh Tax Return, which subsequently increased the basis for calculating the monthly PPh Article 25 installments. This difference triggered the issuance of the STP by the DGT, based on Article 14 paragraph (1) letter a of the General Provisions and Tax Procedures Law (UU KUP). On the other hand, the Taxpayer argued that PPh Article 25, according to Article 25 of the PPh Law, is only a prepayment to ease the payment burden and is not a final tax liability. The tax actually owed, as regulated in Article 12 paragraph (1) of the UU KUP, only arises at the end of the Tax Year (PPh Article 29). Therefore, since the Taxpayer had fully paid the PPh Article 29 for 2023, the substance of the principal PPh Article 25 collection in the STP became void and irrelevant. The DGT insisted that the principal tax amount of the STP could not be cancelled based on PMK 8/PMK.03/2013, which limits cancellation only to administrative sanctions.

The Tax Court Judges firmly supported the Taxpayer's substantial view. In their consideration, the Judges assessed that the Taxpayer's action of amending the Annual Tax Return was a form of good faith in implementing the self-assessment system. Furthermore, the Panel stated that the function of the PPh Article 25 installment automatically ceases or loses its significance when the actual tax owed (PPh Article 29) has been fully paid. Consequently, the issuance of the STP collecting the principal installment amount is substantially unfounded. Although the Panel deemed the Article 14 paragraph (3) UU KUP interest penalty inappropriate in this context, the administrative penalty of Rp12,892,683.00 was maintained by the Panel only because the Taxpayer explicitly stated that they had no objection to paying the penalty in the Lawsuit Letter.

The Tax Court Panel's decision to grant the Taxpayer's lawsuit in its entirety sets an important precedent. Legally, this decision validates the litigation strategy to cancel the principal amount of the PPh Article 25 STP issued due to installment underpayment, provided the Taxpayer can prove the settlement of the year-end tax liability. The implication of this decision strengthens the principle of tax debt hierarchy, where the final obligation of PPh Article 29 supersedes the estimated status of PPh Article 25. This decision also provides a crucial lesson for Taxpayers to be more meticulous in determining litigation strategy, including carefully considering the penalty position which might be legally refutable but voluntarily accepted.

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