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In the previous article, we discussed a lot about the Letter of Request for Explanation, Data, and Information (SP2DK). However, besides SP2DK, there is another product issued by the tax office, which is an Advisory Letter. Then, what is the difference between SP2DK and an Advisory Letter? In this article, we will discuss the Advisory Letter issued by the Tax Office and how to respond to it.
Read more: Be careful with SP2DK Follow-up, Six Things to Know About SP2DK, and Knowing the Types of Trigger Data in SP2DK
The terms SP2DK and Advisory Letter are not familiar in the tax law. These terms only appear in the Director General of Taxes Circular Letter Number SE-05/PJ/2022 concerning Taxpayer Compliance Monitoring.
The Circular Letter stipulates, among other things, that the Tax Office is authorized to provide notifications for taxpayers. One form of notification given by the tax office is an Advisory Letter. In addition, the provision also stipulates that the Advisory Letter issuance is carried out as a follow-up to formal research activities and in the context of guidance if information is known or obtained indicating the existence of tax obligations that will be owned by taxpayers in the future.
There are four types of Advisory Letters, including Advisory Letters to report their business to be confirmed as a taxable entrepreneur, Advisory Letters to fulfill tax installment obligations in the current year that must be paid by the taxpayer himself, Advisory Letters to make corrections to tax reports and other Advisory Letters.
An Advisory Letter to report the business to be confirmed as a taxable entrepreneur is issued by the Tax Office to taxpayers who have met the requirements to be confirmed as a taxable entrepreneur, but the taxpayer has not reported their business to the Tax Office to be confirmed.
An Advisory Letter to fulfill the tax installment obligation in the current year that must be paid by the taxpayer himself is issued for several reasons, including:
- Taxpayers are urged to make tax installment payments in the current year that have not been fulfilled by the taxpayer until the due date of payment as stated in the provisions of tax laws and regulations.
- Taxpayers are encouraged to make payments for the shortage of tax installments in the current year in accordance with the tax return that has been submitted by the taxpayer.
- Taxpayers are encouraged to make payments for the shortage of tax installments in the current year because the annual income tax return for the previous fiscal year is submitted after the specified deadline, the taxpayer is given an extension of the period for submitting the annual income tax return, and the taxpayer corrects the annual income tax return itself, which results in tax installments in the current year greater than the tax installments in the current year before the correction of the tax return.
- Taxpayers are encouraged to increase tax installment payments in the current year for the remaining tax period of the current tax year because taxpayers experience changes in business conditions or activities, and income tax payable for the current tax year is projected to increase compared to the previous tax year.
On the other hand, an Advisory Letter to make corrections to the tax report is issued by the tax office because there are writing errors or there are tax returns that are incomplete in writing and the taxpayer has not corrected them. In addition, an Advisory Letter to make corrections is also issued because the taxpayer has not completed or attached the required information or documents.
Please note that the Advisory Letter must be responded to by the taxpayer within an immediate period. This is because an Advisory Letter has consequences if it is not responded to immediately.
For example, if an Advisory Letter related to business reporting to be confirmed as a taxable entrepreneur does not receive an adequate response from the taxpayer, the Tax Office can follow up by issuing an audit warrant. On the other hand, if the Advisory Letter related to the payment of tax installments for the current year that has not been fulfilled is not immediately responded to by the taxpayer within seven working days of the Advisory Letter being issued, the Tax Office can issue a tax invoice.
The same thing also applies to the Advisory Letter to dynamize the installment of Income Tax Article 25. That is, if the taxpayer does not immediately increase the tax installment in the current year, starting from the earliest tax period of the remaining tax period of the current tax year, the Tax Office can follow up with the issuance of a Decree on the Calculation of the Amount of Tax Installment in the Current Tax Year.
This is the explanation related to the Advisory Letter. Based on the explanation, we know that generally, an Advisory Letter is issued by the tax office for four main reasons. In addition, the Advisory Letter is also issued because there are formal requirements that have not been fulfilled by the taxpayers in the current year.
This is different from SP2DK, which focuses more on the fulfillment of material compliance and the analysis of financial statements in the years before the current tax year.
Here is an example of an Advisory Letter. If you need further explanation, Ideatax is ready to help.
