If a legal tax collection instrument is not paid within the required time, the DGT may by law issue a Distress Warrant (Surat Paksa) to a taxpayer. The instruments include the following documents:

• Tax Collection Letters/STP;
• Underpaid Tax Assessment Letters/SKPKB;
• Additional Underpaid Tax Assessment Letters/SKPKBT;
• Tax Objection Decision Letters (which demand an additional payment from the taxpayer);
• Tax Court Decisions (which demand an additional payment from the taxpayer);
• Correction Decision Letters (which demand an additional payment from the taxpayer).

The relevant taxpayer is required to pay the underpaid tax stated in a tax collection instrument within a month of the instrument date. Generally, late payments trigger an interest penalty at 2% per month.

Under the current Tax Administration Law, taxpayers are bound to pay only the minimum amount they have agreed to in the tax audit closing conference, provided that they file an objection or at a later stage, an appeal in respect to the particular tax assessment letter.

The remaining part of the assessment not agreed during the closing conference will only be due after the DGT has made a decision on the objection or the tax court makes a decision on the appeal that is not in the taxpayer’s favour.

If the underpaid tax is not paid within the stipulated time period, the DGT may undertake the following steps as part of the execution of the Distress Warrant:

a. Issue a Warning Letter (Surat Teguran) if the underpaid tax is not settled within seven days of the due date;
b. Issue a Distress Warrant if the underpaid tax is not settled within 21 days of the issuing of the Warning Letter;
c. Issue a Confiscation Order (Surat Sita) if the underpaid tax is not settled within 48 hours of the issuing of the Distress Warrant;
d. Publish an auction announcement with respect to the confiscated assets if the underpaid tax is not settled within 14 days of the issuing of the Confiscation Order;
e. Undertake a public auction if the underpaid tax is not settled within 14 days of the auction announcement.