An incorrect Indonesian tax assessment does not always require a formal objection. Certain errors can be corrected through a separate procedure with the Directorate General of Taxes (DGT), while an objection is generally used to challenge the substance of an assessment. The distinction matters because objections are subject to filing deadlines.
When Can a Tax Assessment Be Corrected?
Indonesia’s tax procedures allow the DGT to correct certain errors in tax assessments and other tax decisions, either on its own initiative or following a taxpayer’s request.
The correction mechanism generally covers:
- Writing errors, such as incorrectly recorded names, numbers, dates, or other information.
- Calculation errors affecting the amount stated in the decision.
- Errors in applying certain tax provisions that fall within the scope of the correction procedure.
For instance, if the underlying figures in a PT PMA’s assessment support the DGT’s determination but the final amount contains a calculation error, the company may be able to request correction without filing an objection.
Correction or Objection: Which Procedure Applies?
| Correction | Objection | |
|---|---|---|
| Purpose | Correct an identifiable error in a tax decision | Challenge the substance of a tax assessment |
| Typical issue | Writing, calculation, or qualifying application error | Disagreement with tax losses, tax payable, or substantive audit adjustments |
| Nature | Administrative correction | Formal tax dispute procedure |
| Possible next stage | Depends on the decision and circumstances | Appeal to the Tax Court if the objection decision remains disputed |
Suppose the DGT audits a foreign-owned company and concludes that certain expenses are not deductible. If the company believes those expenses should be deductible, the disagreement concerns the substance of the assessment and generally requires an objection.
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Depending on the circumstances, taxpayers may also have separate remedies for the reduction or cancellation of certain incorrect assessments or administrative sanctions.
Why the Objection Deadline Still Matters
An objection generally must be submitted within three months from the date the tax assessment is sent, or from the date tax is withheld or collected by a third party. An exception can apply where the taxpayer can demonstrate that the deadline could not be met because of circumstances outside its control.
A taxpayer should not assume that filing a correction request automatically extends the ordinary objection deadline. Treating a substantive dispute as a correction issue could therefore put the company’s ability to challenge the assessment at risk.
If the DGT issues an ex officio correction decision and the taxpayer has not yet filed an objection against the relevant assessment, the taxpayer may generally file an objection within three months from the date that correction decision is sent.
What Happens After a Correction Request Is Filed?
A correction request should identify the specific error and provide the information supporting the requested correction. During its review, the DGT can request additional data, information, or explanations from the taxpayer.
The DGT must generally issue its correction decision within six months of the date the request is received. The decision can approve or reject the taxpayer’s request. If approved, the correction can increase, reduce, or eliminate the amount of tax payable or correct another qualifying error.
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If the six-month period expires without the DGT issuing a decision, and the DGT has not returned the request for failing to meet the applicable requirements, the correction request is deemed approved.
The DGT must then issue the correction decision within one month after the six-month period expires.
Resolve Tax Assessment Errors with MAP Resources Indonesia
MAP Resources Indonesia can review tax assessments and audit findings, determine the appropriate response, prepare supporting documentation, and assist with communications with the Indonesian tax authorities. For assistance with an Indonesian tax assessment, contact MAP Resources Indonesia at info@mapresourcesindonesia.com.
