Procedures for Filing an Objection and Its Withdrawal

In the dynamics of the self-assessment tax system, calculation differences between the Taxpayer and the tax authorities (Tax Auditors) are a common occurrence. When the tax audit process ends with the issuance of a Tax Assessment Notice (SKP), the Taxpayer has a constitutional right to dispute the result if it is felt to be inconsistent with the facts or applicable regulations.

Scope and Requirements for Filing Objections

The first step in filing an objection is understanding what objects can be disputed. Based on PMK Number 118 of 2024 and the KUP Law, Taxpayers may only submit an objection to the Director General of Taxes regarding:

1. Notice of Tax Underpayment Assessment (SKPKB);
2. Notice of Additional Tax Underpayment Assessment (SKPKBT);
3. Notice of Nil Tax Assessment (SKPN);
4. Notice of Tax Overpayment Assessment (SKPLB);
5. Tax withholding or collection by a third party;
6. Notice of Tax Payable (SPPT); or
7. Tax Assessment Notice for Land and Building Tax (SKP PBB).

The material that can be objected to is limited to the material or content of the tax assessment notice, which covers the amount of loss according to tax provisions, the amount of tax, or the material of withholding/collection.

Formal Filing Requirements

1. One objection letter may only be filed for one tax assessment notice, one withholding, or one tax collection.
2. The letter must be compiled in the Indonesian language by stating the amount of tax payable, amount of loss, or amount of tax withheld/collected according to the Taxpayer's calculation, accompanied by the reasons forming the basis of such calculation.
3. If the Taxpayer files an objection against an SKPKB or SKPKBT, the Taxpayer must pay off the tax still due at least in the amount agreed upon by the Taxpayer in the Final Discussion of Audit Results (Closing Conference), before the objection letter is submitted.
4. The objection letter must be submitted within a period of 3 (three) months from the date the tax assessment notice is sent or the date of tax withholding/collection. Exceptions are only granted if the Taxpayer can prove the existence of circumstances beyond their control (force majeure).
5. The Taxpayer may not submit an application under Article 36 of the KUP Law (such as reduction of sanctions or cancellation of incorrect assessments) for the same SKP if they are currently filing an objection.

Objection Settlement Process by the DJP

After the objection letter is received in full, the Director General of Taxes has a maximum time of 12 (twelve) months to provide a decision. During this process, the DJP has the authority to:

• Borrow books, records, data, and information from the Taxpayer.
• Request additional information or evidence from third parties.
• Conduct discussions and clarifications by summoning the Taxpayer.
• Conduct examinations for other purposes or valuations.

Before issuing a decision, the DJP is required to deliver a Notification Letter to Attend (SPUH) to the Taxpayer. This SPUH is attached with the List of Objection Research Results. The Taxpayer is given the opportunity to attend to provide explanations or obtain explanations regarding the results of the objection research.

Procedures for Withdrawal of Objection

In certain situations, the Taxpayer might change their mind and wish to cancel the ongoing dispute. Tax regulations (Article 55 of PMK 118 of 2024 and Article 32 of PP 50 of 2022) facilitate this through the Objection Withdrawal mechanism.

Conditions and Time Limit for Withdrawal

Taxpayers may withdraw an objection submission that has been delivered to the Director General of Taxes provided that the withdrawal is carried out before the date the Notification Letter to Attend (SPUH) is received by the Taxpayer. The withdrawal request must meet the provisions:

1. Submitted in writing in the Indonesian language accompanied by reasons for withdrawal.
2. One withdrawal request for one objection letter.
3. Signed by the Taxpayer, Representative, or Proxy (by attaching a special power of attorney).
4. Delivered to the Tax Service Office (KPP) where the Taxpayer is registered.

Legal Consequences of Withdrawal

1. Taxpayers who have withdrawn their objection submission cannot resubmit an objection against the same tax assessment notice. However, there is an exception if the withdrawal is done before there is interaction (such as a data request) and it is still within the 3-month period since the SKP issuance, the objection can still be resubmitted.
2. Taxpayers who withdraw an objection cannot submit an application for reduction or cancellation of an incorrect tax assessment notice (Article 36 paragraph (1) letter b of the KUP Law).
3. Although they cannot cancel the principal tax, Taxpayers who withdraw an objection can still submit an application for reduction or elimination of administrative sanctions (Article 36 paragraph (1) letter a of the KUP Law).
4. The tax still due in the SKPKB or SKPKBT that was not agreed upon in the final discussion will become a tax debt starting from the date of issuance of the Tax Assessment Notice immediately after the withdrawal is approved.

Filing an objection is a right, but it must be executed with the right strategy and administrative compliance. The decision to file or withdraw an objection must be based on a mature analysis of the case position and applicable rules.

References:

1. Law Number 6 of 1983 concerning General Provisions and Tax Procedures (KUP) as last amended by Law Number 6 of 2023.
2. Government Regulation Number 50 of 2022 concerning Procedures for the Implementation of Rights and Fulfillment of Tax Obligations.
3. Minister of Finance Regulation Number 118 of 2024 concerning Procedures for Rectification, Objection, Reduction, Elimination, and Cancellation in the Field of Taxation.