Victory in PPh Article 25 Lawsuit: Tax Court Confirms PPh Article 29 Payment Nullifies the Principal of the Tax Collection Letter (STP)

Tax Court Decision Number PUT-011550.99/2024/PP/M.IXA Year 2025 provides crucial clarity regarding the legal standing of Income Tax Article 25 (PPh Article 25) within the self-assessment regime and the issuance of Tax Collection Letters (STP). This dispute involved PT AH, which filed a lawsuit against the Director General of Taxes’ (DGT) decision to reject the annulment of the principal amount of the PPh Article 25 STP for the June 2023 Tax Period. The core legal conflict arose because the Taxpayer was deemed to have underpaid PPh Article 25 installments following an amendment to the 2022 Corporate Income Tax Annual SPT. However, the Taxpayer argued that the entire 2023 Corporate Income Tax liability had been settled through PPh Article 29, demonstrating their good faith.

The main conflict in this case is the tension between the formal obligation to deposit monthly PPh Article 25 installments, regulated under KEP-537/PJ./2000, and the substantive nature of the tax payable as stipulated in Article 12 of the KUP Law. The DGT upheld the formal shortage in PPh Article 25 payment and considered the STP issuance a legitimate step under Article 14 of the KUP Law. Conversely, the Taxpayer asserted that PPh Article 25 is merely a tax credit, not the final tax payable. By settling the PPh Article 29, which represents the actual tax payable at the end of the period, the collection of the principal amount of the temporary PPh Article 25 installment loses its substantial legal basis.

The Panel of Judges resolved this conflict by prioritizing substance over form. The Judge held that PPh Article 25 is intended to ease the Taxpayer’s burden and functions as an installment or tax credit. With the payment of PPh Article 29, the objective of collecting the entire Corporate Income Tax was achieved, and the state incurred no loss. This assessment emphasizes the Taxpayer’s good faith in fulfilling their tax obligations. Therefore, the issuance of the STP to collect the principal amount of PPh Article 25, which was fully compensated by PPh Article 29 payment, was deemed substantively inaccurate and contrary to the principles of legal certainty and justice.

The implication of this Decision is highly significant for tax litigation practices in Indonesia. This ruling sets a strong precedent that Taxpayers can use evidence of PPh Article 29 payment as grounds for annulling the principal amount of the PPh Article 25 STP, provided the annual tax payable has been settled. The impact was the annulment of the STP principal amount of Rp346,776,033.00, while the administrative penalty was upheld as acknowledged by the Taxpayer. This Decision reinforces the argument that PPh Article 25 must be viewed in the context of the overall Corporate Income Tax, not as a standalone, independent obligation.

In summary, this Tax Court Decision confirms that in the self-assessment system, the good faith of the Taxpayer, proven by the final settlement of the tax payable (PPh Article 29), will be the primary consideration for the Panel of Judges to annul the collection of temporary advance payments (PPh Article 25) that were initially deemed deficient. This provides greater legal certainty for Taxpayers facing PPh Article 25 STPs near or after the end of the Tax Year.

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