What is tax audit in Indonesia? Process and practical response after PMK15/2025

In Indonesia, the tax office may conduct tax audits regarding the contents of declarations such as corporate tax, withholding tax, and VAT. In particular, when filing a corporate tax or VAT refund, there are many cases where the process proceeds to a tax audit, so it is important to understand the process and response deadlines in advance.

Additionally, PMK No.15/2025, which came into effect in 2025, has made changes to the types and processes of tax audits. In some cases, the investigation period and rebuttal period are shorter than before, and in the future, it will be necessary to prepare materials at an earlier stage and respond quickly to questions from investigators.

In this article, we will explain the basic flow of Indonesian tax audits, changes after PMK15/2025, and practical points to note in each process.

Main cases where tax audits are conducted in Indonesia

A typical case where a tax audit is conducted in Indonesia is when a tax refund is filed. A tax audit may be conducted if a refund is filed in a corporate tax, income tax, or VAT return, or if the tax amount is reduced by an amended tax return and the tax refund is filed as a result.

In addition, a tax investigation may be conducted if a letter of inquiry is received from the tax office and it is deemed necessary based on the answers, or at any time at the discretion of the tax office. The attached documents also list refund returns, amended tax returns, responses to questionnaires, and arbitrary decisions by the tax office as triggers for tax audits.

In the case of a refund declaration, corporate tax, withholding tax, and VAT are all subject to tax in many cases, and as a general rule, VAT is the main focus of a VAT refund application. However, if the error spreads to other tax categories, the scope of the investigation may expand to other tax categories.

Classification of tax audit according to PMK15/2025

PMK No.15/2025 mainly organizes the following three types of tax audits.

If there are transfer pricing issues, the investigation period may be extended. The attached document states that if there are transfer pricing issues, a four-month extension is possible.

In the past, it was common for refund investigations to proceed within one year from the filing of a tax return, but in the future it is expected that the process will be shortened depending on the type of investigation.

Basic flow of tax investigation

Indonesian tax audits generally proceed as follows.

[Basic process of tax audit]

SP2 issue/initial meeting
↓
Submission of requested materials from the tax office
↓
Conducting tax audits
↓
Notification of preliminary findings
↓
Issuance of SPHP and counterargument by taxpayers
↓
Final meeting with the tax office
↓
Issuance of SKP

It should be noted that in the post-PMK15/2025 process, preliminary findings will be communicated to taxpayers before the issuance of the SPHP, the period for rebutting the SPHP will be shortened to 5 business days, and the period from issuance of the SPHP to final discussion will be up to 30 business days.

SP2 issuance and first meeting

A tax audit begins with the issuance of a tax audit notice, SP2. SP2 includes information such as the fiscal year covered, tax items covered, and the schedule for the first meeting.

Please note that tax returns cannot be amended after SP2 is issued. Additionally, the director may be required to attend the first meeting, so companies with Japanese executives involved should confirm the schedule in advance.

At the first meeting, there is no need to force yourself to answer any questions you don't understand on the spot. If you provide incorrect explanations, you may be at a disadvantage in subsequent investigations, so it is important to take home the matters that need confirmation and sort them out. The attached documents also state that there is no need to force yourself to answer questions that you do not understand at the first meeting.

Submission of requested materials and implementation of tax investigation

After SP2 is issued, the tax office will request the submission of documents. The deadline for submitting materials is usually one month from the date of request.

What you should be especially careful about here is that there is a risk that materials submitted after the deadline may not be accepted as evidence. Additionally, incomplete documentation may lead to the risk of additional taxation. Therefore, it is necessary to organize the requested materials as early as possible, and to consider a response plan if there are any missing materials.

During a tax audit, the examiner will ask questions based on the submitted materials. While it is best to answer questions as quickly as possible, it is also important to be consistent in your answers. Accounting data, tax returns, invoices, contracts, transfer pricing documents, etc. should be checked in advance to ensure that there are no discrepancies in their explanations.

Notification of preliminary findings and rebuttal to SPHP

One of the important changes after PMK15/2025 is that taxpayers will be notified of the preliminary findings before issuing the SPHP. This gives the taxpayer an opportunity to consult with the examiner and explain the findings.

If an agreement is reached with the investigator, the findings may be rescinded. On the other hand, if no agreement is reached, proceed to SPHP.

SPHP is a notice that lists the findings from the tax audit and the provisional additional tax amount. If an SPHP is issued, the taxpayer must refute it in writing within five business days of issuance. Since the response period is shorter than before, it is important to prepare rebuttal materials during the investigation period, rather than starting to collect materials after receiving the SPHP. The attached document states that a written rebuttal can be submitted within 5 business days from the issuance of the SPHP.

If you can refute the claim properly, you may be able to significantly reduce the amount of additional tax owed. On the other hand, if you do not refute it or if your refutation materials are insufficient, there is a risk that the tax office's findings will be recognized as is.

Final meeting and issuance of SKP

After rebutting the SPHP, a final meeting with the tax office will be held. This is a key moment where the taxpayer can make the final claim.

At the final meeting, we formally record whether we agree or disagree with the findings. These minutes will serve as important evidence in the event that you file an objection or proceed to tax court. Therefore, it is important to clearly state the company's views and not to easily agree with them.

A tax assessment, SKP, will then be issued. SKPs include SKPLB, which indicates overpayment, SPKKB, which indicates underpayment, and SKPN, which indicates no overpayment or deficiency.

If additional tax is incurred due to SKPKB, it must be paid within one month from the date of issue.

Objection/tax court after tax audit

If you are dissatisfied with the contents of the SKP, you can proceed to file an appeal. The attached document states that if you are dissatisfied with the SKP, you can proceed to file an appeal within three months.

On appeals, the Directorate General of Taxation will make a decision within 12 months. If you are still dissatisfied, you can proceed to a tax court within three months.

However, if you file an objection or proceed to tax court without paying the additional tax amount, you may incur a penalty of up to 60% if you lose. Therefore, when deciding whether to contest, it is necessary to comprehensively consider the tax amount, evidence, likelihood of success, and the impact on cash flow.

Practical measures to avoid being disadvantaged in a tax audit

In order to avoid being disadvantaged in a tax audit, it is important to take the following actions.

・Organize tax returns, ledgers, invoices, and contracts before receiving SP2
・Manage document submission deadlines and create a system that allows submissions within one month
・Promptly and consistently answer questions from investigators
・Provide explanations and counterarguments as early as possible at the stage of preliminary investigation results before SPHP
・Prepare evidence so that you can refute the SPHP within 5 business days after it is issued.
・Accurately record the company's arguments in the minutes of the final meeting
・If you wish to dispute after SKP, strictly adhere to the deadlines for opposition and tax court proceedings.

In particular, for companies that file tax refund returns or that have issues related to transfer pricing, VAT, or withholding taxes, it is important to prepare materials before filing a tax return, rather than responding only after a tax audit has begun.

FAQ

Q1. Will filing a tax return in Indonesia result in a tax audit?

原則として、税務調査が実施されます。

Q2. Can I amend my return after receiving SP2?

As a general rule, tax returns cannot be amended after SP2 is issued. Therefore, it is important to check the accounting data, tax calculations, attachments, and reasons for the refund position before filing the return.

Q3. By when do I need to submit the materials requested by the tax office?

Generally, the documents must be submitted within one month from the date of request for information from the tax office. Materials submitted after the deadline run the risk of not being accepted as evidence. Rather than rushing to gather materials after the investigation has begun, it is important to prepare them before filing the declaration.

Q4. What is SPHP?

SPHP is a notice that describes the findings from the tax audit and the provisional additional tax amount. If a taxpayer disagrees with the contents of the SPHP, he or she must refute the matter in writing within the deadline.

Q5. How long does it take to object to SPHP?

After PMK15/2025, a written rebuttal must be made within 5 working days of the issuance of the SPHP. Because the period is short, it is important to organize rebuttal materials during the investigation, rather than preparing materials after receiving the SPHP.

Q6. What should I pay attention to at the final meeting?

The final meeting is an important moment for taxpayers to make their final claims. You should carefully review the minutes to formally record whether you agree or disagree with the points raised. These minutes will be important evidence if you file an objection or proceed to tax court.

Q7. What should I do if I am dissatisfied with SKP?

If you are dissatisfied with the contents of the SKP, you can, in principle, proceed to file an objection within three months. If you are still dissatisfied, you can proceed to a tax court. However, if you fight without paying the additional tax amount, you should be careful about the risk of penalties if you lose the case.

Q8. What materials should I prepare before undergoing a tax audit?

It is important to organize tax returns, general ledger accounts, invoices, contracts, bank statements, import documents, VAT documents, withholding tax documents, transfer pricing documents, etc. In particular, when filing a refund application, it is necessary to prepare materials in advance to explain the reasons for the refund.

summary

Tax audits in Indonesia are often triggered by tax refund filings, and may extend to multiple tax categories such as corporate tax, withholding tax, and VAT.

PMK15/2025 has streamlined the types of investigations and shortened the investigation period and the period for rebuttal to SPHP. In the future, we will be required to respond more quickly than ever before.

The important things in a tax audit are to submit documents on time, accurately manage interactions with the examiner, properly refute the SPHP, and document the company's claims at the final meeting.

If you are concerned about dealing with tax audits, SP2, SPHP, SKP, appeals, and tax courts in Indonesia, we recommend that you consult a specialist as soon as possible.

Keystone Consulting Group provides practical support for Japanese companies in dealing with tax audits, appeals, tax trials, and transfer pricing investigations in Indonesia.

Related services:Indonesia tax audit/transfer pricing support