Tax administration sanctions are imposed for non-compliance by taxpayers in fulfilling their tax obligations. However, the tax authority provides an opportunity for taxpayers to apply for relief or the elimination of the administrative sanctions imposed.
In the previous article, we have described the forms of tax administration sanctions in Indonesia which include interest, fines, and increases. In this article, we will discuss the terms and conditions for submitting a reduction or abolition of tax administration sanctions.
The terms and conditions for the reduction and elimination of administrative sanctions are regulated in the Minister of Finance Regulation No. 8/PMK.03/2013 concerning Procedures for Reduction or Elimination of Administrative Sanctions and Reduction or Cancellation of Tax Assessment Letters or Tax Collection Letters ( PMK 8/2013 ).
Based on Article 2 paragraph (1) PMK 8/2013, the reduction or elimination of such sanctions can only be granted by the tax authorities if the sanctions are imposed due to the taxpayer’s negligence or not because of his fault.
3 administrative sanctions can be reduced or eliminated based on the taxpayer’s request as stipulated in Article 4 PMK 8/2013. First, the administrative sanctions are listed in the tax assessment letter (SKP).
Second, administrative sanctions are listed in the tax bill (STP) relating to the issuance of SKP. The reduction or elimination is not given to administrative sanctions in the STP issued based on Article 25 paragraph (9) and Article 27 paragraph (5d) of Law no. 6 of 1983 concerning General Provisions and Tax Procedures stated in Law no. 11 of 2020 concerning Job Creation ( KUP Law ).
For information, Article 25 paragraph (9) of the KUP Law contains provisions for administrative sanctions of a 50% fine against taxpayer objections that are rejected or partially granted. Meanwhile, Article 27 paragraph (5d) of the KUP Law relates to the imposition of an administrative sanction of a 100% fine for a taxpayer’s appeal that is rejected or partially granted.
Third, the administrative sanctions listed in the STP are other than those referred to in the second point.
Furthermore, referring to Article 5 paragraph (2) and paragraph (3) of PMK 8/2013, an application for reduction or elimination of administrative sanctions listed in the SKP or STP can be submitted if alternatively the following 8 conditions are met.
First, no objection was raised. Second, an objection is filed, but it is revoked by the taxpayer and the Director-General of Taxes has approved the request for revocation of the mandatory. Third, an objection was raised, but it was not considered.
Fourth, there is no request for a reduction or cancellation of an incorrect SKP. Fifth, a request for a reduction or cancellation of an SKP that is incorrect is filed but is revoked by the taxpayer. Sixth, an application for cancellation of the SKP results from the examination or verification is not being submitted.
Seventh, an application for cancellation of the SKP results from the examination or verification is filed, but it is revoked by the taxpayer. Eighth, an application for cancellation of the SKP results from the examination or verification is submitted, but the application is rejected.
In addition to meeting the eight conditions above, the application for reduction or elimination of administrative sanctions listed in the STP must also meet the following conditions.
- The STP is not submitted for a reduction or cancellation of an incorrect STP; or
- STP is submitted for a reduction or cancellation of an incorrect STP, but it is revoked by the taxpayer.
Taxpayers can obtain a reduction or elimination of administrative sanctions listed in the SKP or STP by submitting a letter requesting the reduction or elimination of administrative sanctions to the director-general of taxes. The procedure for applying a reduction or abolition of administrative sanctions will be discussed further in the next tax class article.