Indonesia uses a self-assessment system under which taxpayers are trusted to calculate, pay, and report their own taxes in accordance with prevailing tax laws and regulations. However, the DGT may issue tax assessment letters to a particular taxpayer if it fnds that, based on a tax audit or on other information, the taxpayer has not fully paid all tax liabilities. A tax assessment letter may also be issued by the DGT to a taxpayer who ignores a warning letter to fle a tax return within a specifed period. Failure to maintain books in accordance with the prescribed standards is another condition that may lead the DGT to issue an ex-offcio tax assessment.

A tax assessment letter applies only to one specifc tax for one particular tax period or year and typically takes into account the following factors:

• • The tax due;
• • The applicable tax credits;
• • The resulting balance between the tax due and the tax credits (overpaid, nil, or underpaid);
• • The administrative penalty (interest or a surcharge