For many companies in Indonesia whose fiscal year ends in December, the end of this month is the deadline for filing corporate tax returns, four months from the end of the fiscal year. In fiscal 2020, due to the impact of the new coronavirus, many companies will likely see worse performance compared to the previous year. If this happens, the prepaid import corporate tax (PPH22) and estimated tax payment (PPH25) will exceed the final corporate tax amount at the end of the fiscal year, resulting in a "refund position." If you choose to file a tax refund, you will almost certainly be subject to a tax audit. Therefore, this time we will explain the procedures and processes of tax audits.

The tax audit process proceeds as follows:

(1) Investigation notification (SP2)

First, we receive a tax audit notice called "SP2" and begin the investigation. The notification is usually sent 3 to 4 months after the tax return is submitted, and if you request a refund, you will almost certainly receive this notification, so you need to prepare in advance. SP2 includes the year to be surveyed, tax items, and the schedule for the first meeting. The director must be present at the first meeting, so the Japanese director should also make sure to set aside some time at the beginning.

(2) Submission of materials

At the same time as SP2 is issued, the investigating officer will request the submission of materials, and the deadline for submitting materials is one month at the most. Please note that if you do not submit it within one month, the decision will be made at the discretion of the investigator and you will not be able to use it for future rebuttals.

(3) Conducting the survey

A substantive tax investigation will begin based on the submitted materials, and you will need to answer the examiner's questions. The exchange usually lasts about five months. This work is generally done at the tax office, but in some cases the official in charge may visit you directly.

(4) Tax audit findings (SPHP) and counterarguments

Within one year of filing a tax refund, the tax office must submit a document called "SPHP" that lists the findings and revised amounts of the audit. If you do not, the tax office will automatically approve your refund. It is fine as long as the points and revised amounts are acceptable, but if you do not agree with them, you must let them know that you will object. Any objections must be answered in writing before the final review meeting with the tax audit officer and within 7 business days from the issuance of the SPHP. If you do not object, you will be deemed to have agreed to SPHP.

(5) Tax assessment report (SKP)

Finally, an "SKP" will be issued to convey the results of the investigation. SKP results are divided into three types: "SKPLB (overpayment)", "SKPKB (underpayment)", and "SKPN (no overpayment or deficiency)". If the tax is determined to be SKPKB (deficiency in payment) and additional tax is imposed, the payment must be made within one month from the date of issue.

Related laws and regulations: PMK17/03/2013