Interest compensation disputes have intensified in Indonesia's tax litigation landscape following the enactment of the Job Creation Law, which reshaped the map of compensation for delayed tax refunds. PT LI filed a lawsuit against the Director General of Taxes (DGT) for rejecting an interest compensation claim worth IDR 9.4 billion arising from a previous Appeal Decision that favored the Taxpayer. This conflict stemmed from a clash of interpretations between the principle of non-retroactivity championed by the Taxpayer and the administrative legal certainty upheld by the tax authorities and the Board of Judges.
The core of the conflict began when PT LI felt entitled to interest compensation based on Article 27A of the old KUP Law (fixed rate of 2% per month) because the initial assessment (SKPKB) was issued in 2019, before the Job Creation Law took effect. Conversely, the DGT insisted on applying Article 27B of the Job Creation Law in conjunction with PMK 18/2021, which uses market interest rates (lower) and stipulates that interest compensation is only granted if there is an overpayment amount approved during the Final Audit Results Discussion. Since PT LI did not agree to the adjustments in the final discussion minutes, the DGT deemed the administrative requirements unfulfilled.
The Board of Judges, in its legal considerations, emphasized that the procedure for requesting and calculating interest compensation must follow the legal provisions in effect at the time the request is submitted and processed. In this case, the Job Creation Law and its implementing regulations (PMK 18/2021) became the valid legal basis. The Board argued that because the Taxpayer's initial tax return had an Overpayment Compensation status, rather than a refund, and there was no agreement at the closing of the audit, the cumulative administrative requirements for granting interest compensation were indeed not met under the latest regulations.
This decision has a significant impact on Taxpayers' litigation strategies in Indonesia. Successfully winning the core dispute at the Appeal level does not automatically guarantee interest compensation if formality aspects during the audit stage are neglected. This case confirms that a Taxpayer's "disagreement" in the closing conference minutes now carries financial consequences, specifically the loss of rights to future interest compensation. This ruling serves as a strong precedent that procedural regulations in the Job Creation Law can effectively limit the material rights of Taxpayers previously regulated under the old KUP Law.
In conclusion, the PT LI case serves as a stark reminder for tax practitioners that coordination between technical strategies during audits and long-term litigation projections is crucial. Taxpayers are recommended to be more cautious when signing final discussion minutes and to consider the implications of Article 27B of the Job Creation Law on potential future cash flows from interest compensation.
A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here
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