A tax assessment letter applies only to one specific 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).
Types of tax assessment letters
The name of a tax assessment letter refers to the resulting balance between the tax due and the tax credits. Accordingly, there are three types of tax assessment letters:
• Overpaid Tax Assessment Letter (Surat Ketetapan Pajak Lebih Bayar/SKPLB) if the tax due is less than the tax credit amount;
• Underpaid Tax Assessment Letter (Surat Ketetapan Pajak Kurang Bayar/SKPKB) if the tax due exceeds the tax credit amount;
• Nil Tax Assessment Letter (Surat Ketetapan Pajak Nihil/ SKPN) if the tax due amount is equal to the tax credit amount.
If an SKPKB is issued, this may include one of the following administrative penalties:
•Interest at 2% per month for a maximum of 24 months;
•A 50% surcharge for income tax liability;
•A 100% surcharge for withholding tax liability;
•A 100% surcharge for VAT and LST liabilities.
Which penalties are applicable will depend on the type
of wrongdoing the taxpayer has committed. The penalty amounts are determined by the application of the relevant rate to the underpaid tax amounts.
Apart from issuing a tax assessment based on tax audit, the DGT may also issue an ex-officio tax assessment letter to a taxpayer who ignores a warning letter to file a tax return within a specified period or fails to maintain books in accordance with the prescribed standards.
Payments of tax assessment
Tax due based on a tax assessment letter must be paid within one month after the issuance of the relevant tax assessment letter. If the taxpayer does not pay the tax due and not apply for an objection, the tax due will be collected using a Distress Warrant.
Statute of limitation
Under the current Tax Administration Law, the DGT can issue an underpaid tax assessment letter for years 2008 onwards within five years after the incurrence of a tax liability, the end of a tax period (month), or the end of (part of) a tax year.
Once a tax assessment letter for a particular tax of a particular month or year has been issued, additional tax assessment letters may still be issued within the specified time limits (five or ten years depending on the tax years) to the extent there is new data (novum) or information which was not disclosed (or not adequately disclosed) in the tax returns and/or during tax audits. The issue of an Additional Underpaid Tax Assessment Letter (Surat Ketetapan Pajak Kurang Bayar Tambahan/SKPKBT) calls for a 100% surcharge on the tax due as an administrative penalty. However, a taxpayer may avoid the surcharge if the SKPKBT was issued based on taxpayer’s voluntary disclosures prior to DGT conducting a tax audit to issue the SKPKBT.
The tax due reported in a tax return is considered certain if no tax assessment letter is issued within the specified time limit. Nevertheless, an SKPKB or an SKPKBT can still be issued beyond the specified time limit to a taxpayer who, by virtue of a court verdict, is found guilty of a taxation crime after the specified time limits. An SKPKB or an SKPKBT issued in such a situation will include an interest penalty totalling 48% of the underpaid tax.