Legal Remedies Other Than Objection: Alternatives for Tax Dispute Resolution and Administrative Correction

1. Rectification (Article 16 of the KUP Law)

This legal remedy is purely administrative and intended to correct errors that are obvious/manifest, not complex interpretation disputes. Based on Article 16 paragraph (1) of the KUP Law jo. Article 2 of PMK 118 of 2024, the Director General of Taxes (DJP), upon the Taxpayer's request or ex officio, may rectify a tax assessment notice (SKP), Tax Collection Letter (STP), or other decision letters which in their issuance contain:

• Writing Errors: Covering errors in writing the name, address, NPWP, letter number, tax type, tax period/year, and due date.
• Calculation Errors: Errors originating from addition, subtraction, multiplication, and/or division of a number.
• Errors in Application of Provisions: Errors in applying tariffs, percentage of Net Income Calculation Norms (NPPN), administrative sanctions, Non-Taxable Income (PTKP), up to tax crediting errors.

The technical procedure for rectification is further regulated in SE-41/PJ/2015, which emphasizes that the purpose of rectification is for administrative order. Taxpayers may submit a rectification request with the condition of one request for one assessment/decision letter. The DJP is required to provide a decision within a period of 6 months.

2. Reduction or Elimination of Administrative Sanctions (Article 36 paragraph (1) letter a of the KUP Law)

Tax administrative sanctions, whether in the form of interest, fines, or increases, sometimes arise not because of the Taxpayer's intention to avoid tax, but due to ignorance or oversight. Article 36 paragraph (1) letter a of the KUP Law grants authority to the Director General of Taxes to reduce or eliminate such administrative sanctions if the sanctions are imposed due to Taxpayer oversight or not because of their fault.

Submission Provisions (PMK 118 of 2024):

• Can only be submitted if the principal tax amount has been paid off.
• The Taxpayer is not currently filing an objection, or has withdrawn their objection submission.
• Can be submitted at most 2 (two) times for one SKP or STP.

It is important to note that this facility is a form of administrative "amnesty" based on the Taxpayer's good faith and reasons for oversight acceptable to the tax authority.

3. Reduction or Cancellation of Incorrect Tax Assessment Notices (Article 36 paragraph (1) letter b of the KUP Law)

This article is often called the "second chance" for Taxpayers who did not file an objection or whose objection submission was not considered, yet the Taxpayer is convinced that the material of the tax assessment is incorrect legally or factually. In accordance with Article 36 paragraph (1) letter b of the KUP Law jo. Article 38 of PP 50 of 2022, the DJP may reduce or cancel an incorrect tax assessment notice.

Filing Requirements (Article 33 of PMK 118 of 2024):

• No objection is filed; or
• An objection was filed but not considered (e.g., because it did not meet formal requirements); or
• An objection was filed but withdrawn by the Taxpayer.
• The application may only be submitted at most 2 (two) times.

4. Reduction or Cancellation of Incorrect Tax Collection Letters (Article 36 paragraph (1) letter c of the KUP Law)

Surat Tagihan Pajak (STP) usually issued due to administrative sanctions or tax collection within the current year. If the Taxpayer feels the STP issued does not have a correct basis, the appropriate legal remedy is to file an application based on Article 36 paragraph (1) letter c of the KUP Law. This procedure is regulated in Article 38 of PMK 118 of 2024.

5. Cancellation of Audit Result SKP with Procedural Defects (Article 36 paragraph (1) letter d of the KUP Law)

This legal remedy is very specific. Article 36 paragraph (1) letter d of the KUP Law regulates the cancellation of SKP resulting from an audit carried out without:

1. Delivery of Notification of Audit Results (SPHP); or
2. Final Discussion of Audit Results (Closing Conference) with the Taxpayer.

If the application is granted, the SKP is deemed void by law, but the audit process must be resumed with the correct procedure in accordance with Article 18 paragraph (2) of PP 50 of 2022.