Tax Audit in Indonesia

Tax Audit

 

TGS AU Partners tax disputes team provides tax litigation assistance services for companies in Indonesia. The advantages of our solution for tax audits, objections and appeals, are as follows:

 

  • Deep expertise and experienced tax team

  • Tax strategy with the right approach

  • Responsive teams in assisting or representing companies in tax disputes

 

Tax Audit in Indonesia

 

Tax audit in Indonesia is activity performed by the Indonesian tax office to collect and process data, information, and/or evidence carried out objectively and professionally based on an audit standard to test compliance with tax obligations and/or for other purposes in order to implement the provisions of tax laws and regulations.

 

The Director General of Tax is authorized to conduct Audit with the aim of testing compliance of tax obligations and/or for other purposes in the context of implementing the provisions of Indonesian tax laws and regulations.

 

The Audit Result Report (Tax Audit) is used as the basis for the issuance of a tax assessment letter and/or a tax collection letter.

 


 

Tax Audit to Test Taxpayer Compliance

 

Criteria for tax audits to test taxpayer compliance in Indonesia

 

Tax audits to test taxpayer compliance in Indonesia are carried out when the following conditions occur:

 

The tax audit to test compliance of the Taxpayer's tax obligations shall be carried out in the event that the Taxpayer submits an application for the refund of the tax overpayment as referred to in Article 17B of the General Provision of Tax Law.

 

Tax Audits to test compliance of Taxpayer's tax obligations could be carried out in the following event.

 

  1. Taxpayer submit a Tax Return stating the overpayment, including the one that has been given a preliminary refund of the excess tax; 

  2. Taxpayer submit a Tax Return reporting loss, instead of profit; 

  3. Taxpayer does not submit or submit the Tax Return but exceeds the time period specified in the Warning Letter; 

  4. Taxpayer is having a merger, consolidation, expansion, liquidation, dissolution, or will leave Indonesia forever; or 

  5. Taxpayer submit a Tax Return that meets the selection criteria based on the results of risk analysis (risk based selection) indicating Taxpayer's tax obligations that are not fulfilled in accordance with the provisions of tax laws and regulations.

 

The scope of the Tax Audit to Test Taxpayer Compliance

 

The scope of the Tax Audit to test compliance may include one, several, or all types of taxes, either for one or several Tax Periods, Parts of the Fiscal Year or Fiscal Year in the past and current years.

 


 

Tax Audit for Other Purpose

 

Tax Audit Criteria for Other Purposes

 

Examination for other purposes in order to implement the provisions of the regulations tax legislation is carried out because of following matters:

a. The issuance of a Taxpayer Identification Number;

b. Removal of Taxpayer Identification Number;

c. Registration or revocation of the registration of the Taxable Entrepreneur;

d. Taxpayers file tax objections;

e. Collection of materials for the preparation of Net Income Calculation Tax Norms;

f. Matching data and/or information;

g. Determination of Taxpayers located in remote areas;

h. Determination of one or more places where Value Added Tax is payable;

i. Audit for tax collection;

j. Determining when production begins or extending the period of compensation for losses in connection with the provision of tax facilities; and/or

k. Requests for information from partner countries of the Double Taxation Avoidance Agreement.

 

Scope of Tax Audit for Other Purposes

 

The scope of the Audit for other purposes in order to implement the provisions of the tax laws and regulations may include the determination, verification, or collection of materials related to the purpose of the Audit.

 


 

Field Tax Audit and Office Audit

 

Tax audits in Indonesia can be carried out including the following types of audits:

  • Field Tax Audit

  • Office Tax Audit

 

The difference between those two kind of tax audit is, in a Field Tax Audit, the tax auditor has the right to:

 

  1. Entering and inspecting a place or space, movable and/or immovable property which is suspected or reasonably suspected to be used to store books or records, documents that form the basis of bookkeeping or recording, other documents, money, and/or goods that can provide clues about income obtained, business activities, free work of the Taxpayer, or objects that are taxable.

  2. Requesting the Taxpayer to provide assistance for the process of the Audit, among others in the form of 1) providing personnel and/or equipment at the expense of the Taxpayer if accessing electronically managed data requires special equipment and/or expertise; 2) provide the opportunity for the Tax Auditor to open movable and/or immovable goods; and/or 3) provide a special room where the Field Audit is conducted in the event that the number of books, records, and documents is so large that it is difficult to bring them to the office of the Directorate General of Taxes; 

  3. Seal certain places or spaces as well as movable and/or immovable goods;

 


 

TGS AU Partners Tax Audit Service

 

We help companies in the tax audit process to reduce the risk and additional tax costs resulting from the tax audit in Indonesia. What we do for our clients, including:

 

  • Representing company management in tax audit

  • Assist client to understands the tax regulation and its application

  • Assist client to develop arguments in the form of formal responses to defend the company's tax position

  • Assist clients in maintaining the company's position in discussing the results of tax audits