The Tax Service Office has the right, within the 10-year statute of limitation applying from the year 1995 onwards, to issue:

· a tax assessment if, after an audit, it considers that the taxpayer has not self assessed the correct amount or if a tax return has not been filed within the stipulated period ; and

· an additional tax assessment if new data and/or data previously undisclosed cause additional tax to be due .

In any case, in addition to the payment of the tax that must still be paid, administrative sanctions in the following form will be applied:

· if the taxpayer has not self-assessed the correct amount, 2% interest per month for a maximum of 24 months ;

· if a tax return has not been filed within the stipulated period, a 50% surcharge of the tax not paid or insufficiently paid or a 100% surcharge of the tax not paid or insufficiently withheld or collected and deposited ; and

· if new data and/or data previously undisclosed cause additional tax to be due, a 100% surcharge of the additional tax.

If no assessment is issued within the 10-year period, then the amount of tax payment as notified in the monthly or annual tax return by the taxpayer become final and fixed. After the expiry of the 10-year period, a tax assessment or an additional tax assessment can still be issued if, after that period, the taxpayer is convicted of a tax crime, and an administrative sanction in the form of interest at the rate of 48% will be applied .

Objection and Appeal

The taxpayer may object to the Director General of Taxes in respect of a tax assessment within three months after the date issue. The objection must be decided by the Director General of Taxes within one year. Failure to issue decision means the taxpayer’s objection is deemed to be accepted. In deciding the objection, the Director General of taxes may reduce, confirm, or even increase the assessment. If the objection is partially or fully successful, the tax already paid will be refunded, along with compensation of 2% interest per month for a maximum of 24 months. The submission of an objection will not postpone the fulfillment of tax payment obligations.

A taxpayer may appeal to the Tax Court against the decision of the Director General of Taxes. The appeal must be made within the period stipulated in the relevant tax regulation or otherwise within three months after the date of the decision. The ruling of the agency for settlement of tax dispute is a final and immediately executable decision.

If the appeal is partially or fully successful, the tax already paid will be refunded along with compensation of 2% interest per month for a maximum of 24 months.

Collection and Enforcement

If the tax being claimed is not paid within two days after the issuance of a distress warrant for payment thereof, an attachment or a seizure on the assets of the taxpayer may be effectuated, followed by auction of such assets. The requirement for sale by auction is not applicable to assets in the form of cash, time deposits, savings, bank accounts, bonds, stocks or other valuable paper and receivables. The methods for liquidation of these types of assets are stipulated in the law.

In addition, if the tax being claimed amounts to at least Rp 100 million and the taxpayer’s intention to settle that tax claim is doubtful, the tax authority may request the Minister of Finance to issue a travel ban against the taxpayer or, with written permission of the Minister of Finance or the Governor of the province where the taxpayer is domiciled, issue an order for imprisonment of the taxpayer.