The deadline to submit the objection petition (i.e., the first stage of the appeal process) is three months after the delivery date of the tax assessment letter. The "delivery date" is defined as the date of the postal delivery stamp, the date of facsimile or the date when the taxpayer receives the tax assessment letter in person if the tax auditor delivers the tax assessment letter in person to the taxpayer.
A taxpayer that is not satisfied with an assessment made by the local tax office may consider the following legal recourses:
- Stage 1 — Submit an objection petition to the Directorate General of Taxation (DGT): Within three months after the delivery date of the tax assessment letter, the taxpayer is entitled to object to a tax assessment letter by submitting an objection petition addressed to the head of the Regional Tax Office.
- Stage 2 — Submit an appeal petition to the tax court: If the DGT rejects the objection petition and the taxpayer wishes to appeal against the DGT's decision, it must submit an appeal petition in writing to the tax court within three months after receiving the decision.
- Stage 3 — Submit a request for reconsideration to the Supreme Court: The tax court's decisions are final and binding. However, under certain specific circumstances, the taxpayer may pursue an extraordinary legal proceeding and challenge the tax court's decision by submitting a request for reconsideration petition (also known as a civil review petition) in writing to the Supreme Court, which is the ultimate court under Indonesia's legal system.
The time associated with the tax litigation process will depend on the complexity of the matter.
- Objection stage: The DGT has to issue a decision within 12 months. If the DGT misses the deadline, the objection petition is deemed granted.
- Appeal stage: The tax court is required to render a decision on the appeal within 12 months from the date of receipt of the appeal petition (with a maximum extension of three months).
- Request for reconsideration stage: The application must be filed within three months after the tax court's decision is delivered. The Supreme Court is required to render a decision on the request for reconsideration within six months after receiving the application. However, in practice, the process can take up to one or two years.
a. Start: After the tax authority has conducted a tax audit and issued a tax assessment letter, the taxpayer can start its dispute resolution by filing an objection petition or by starting a mutual agreement procedure (MAP). The prevailing regulation stipulates that the taxpayer can pursue both an MAP and the objection process at the same time; whichever is completed earlier, the decision will be prevailing.
b. Conduct of the proceedings: The DGT has to issue a decision within 12 months. If the taxpayer disagrees with the objection decision, the taxpayer is allowed to file an appeal petition to the tax court.
The MAP can be processed simultaneously with the appeal process.
c. Completion of proceedings: Generally, the tax court decision is considered final and binding for both the taxpayer and the tax authorities. If the taxpayer simultaneously files an MAP, whichever (either the MAP or the appeal process) is completed earlier, the decision will be prevailing.
d. Other actions: If the taxpayer disagrees with the tax court's verdict that is issued prior to the conclusion of the MAP process, the taxpayer may still pursue an extraordinary legal proceeding under certain specific circumstances by submitting a request for reconsideration in writing to the Supreme Court.