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The renewal of the Tax Administration System (PSIAP) has come to an end. Various preparations are made to ensure the ease of the core tax system trial by the end of the year. The Minister of Finance and the Director General of Taxes were summoned directly by President Joko Widodo to report on the development of the system that is predicted to be able to administer tax data in the future.
Regarding the core tax system, the Minister of Finance said that one of the reasons behind the development of the system is the number of taxpayers and the growing amount of data. Furthermore, the Minister of Finance explained that the number of taxpayers, which originally was 33 million, has now grown to 70 million. Likewise, the number of tax documents was originally around 350 million invoices; now it is 760 million documents (Cabinet Secretariat of the Republic of Indonesia, 2024). The increase in data and the number of taxpayers require a qualified system. Therefore, through Presidential Regulation No. 40/2018, the government assigned the Ministry of Finance to build a reliable and modern system.
One of the modules developed in Coretax is the overbooking application, interest reward, and refund of tax overpayment. At this time, only overbooking requests can be made online through e-PBK. But in the future, taxpayers can apply for interest refunds online through CoreTax without having to come to the Tax Office. Unfortunately, this service will only be provided to low-risk taxpayers, such as taxpayers who submit their tax returns on time, both periodically and annually, and make tax payments on time.
So, what is meant by Interest Rewards? Through this article, we will discuss further the term interest reward, the conditions for obtaining it, and the procedures for applying for it.
The legal basis used as the basis for granting interest rewards is Law Number 6 of 1983 concerning General Provisions and Procedures for Taxation, as last amended by Law Number 7 of 2021 concerning Harmonization of Tax Regulations. Article 11 paragraph (3) of the KUP Law, among others, stipulates that if the refund of tax overpayment is made after a period of 1 (one) month, the Government provides interest compensation of 2% (two percent) per month for the delay in the refund of tax overpayment, calculated from the time limit as the refund of tax overpayment ends until the time when the refund of the excess is made.
Later on, this provision is derived into Government Regulation Number 74 of 2011 concerning Procedures for Implementing Rights and Fulfilling Tax Obligations as last amended by Government Regulation No. 50 of 2022. In this provision, the Government regulates that if the submission of an objection, appeal, or request for reconsideration is partially or fully granted resulting in an overpayment of tax, the taxpayer is entitled to an interest reward.
However, the regulation also limits the interest reward given to the overpayment of tax to a maximum of the overpayment agreed amount by the taxpayer in the Final Discussion of Audit Results on the Tax Return stating the overpayment that has been issued a Tax Assessment Letter. The previous provision did not regulate the maximum limit of interest.
Regarding the interest rate, the latest provision stipulates that the interest reward rate is set based on the interest rate per month determined by the Minister based on the benchmark interest rate divided by 12 (twelve). This is different from the previous provision, which stipulated that the interest rate is 2% per month. As for the maximum period of interest reward, the latest provision still adopts the old provision, which stipulates that interest reward is given for a maximum period of 24 months.
Furthermore, the latest provision stipulates that the interest reward is calculated from the date of issuance of the Tax Assessment Letter until the date of issuance of the Objection Decision Letter, Appeal Decision, or Reconsideration Decision.
Furthermore, the provision stipulates that if the taxpayer files an objection, an interest reward will be given if no appeal is filed with the Tax Court against the Objection Decision Letter. If the taxpayer files an appeal and the Appeal Decision has been received by the Director General of Taxes from the Tax Court, the interest reward is given. Or, when the taxpayer submits a request for reconsideration, the interest reward as a result of the issuance of the reconsideration decision is given if the reconsideration decision has been received by the Director General of Taxes from the Supreme Court.
For example, SKPKB is issued with an accrued tax amount of Rp2,000,000,000.00 (two billion rupiah) on the Corporate Income Tax Return for Fiscal Year 2023, which states an overpayment of tax of Rp3,500,000,000.00 (three billion five hundred million rupiah).
In the Final Discussion of Audit Results, the taxpayer does not agree to all accrued taxes and agrees that the amount of overpayment, according to the taxpayer, is Rp2,500,000,000.00 (two billion five hundred million rupiah). Since the amount of overpayment agreed upon by the taxpayer is greater than the tax return, no payment is made by the taxpayer.
Based on the objection filed by the taxpayer, the Director General of Taxes issues an Objection Decision Letter stating that there is an overpayment amount of Rp2,600,000,000.00 (two billion six hundred million rupiah).
The amount of tax overpayment refunded to the taxpayer is Rp2,600,000,000.00 (two billion six hundred million rupiah), which is the amount of overpayment as stated in the Objection Decree. In this case, the taxpayer shall be given an interest reward per month at the prevailing benchmark interest rate at the beginning of the interest reward calculation divided by 12 (twelve) for a maximum of 24 (twenty-four) months calculated from the amount of overpayment agreed by the taxpayer in the Final Discussion of Audit Results amounting to Rp2,500,000,000.00 (two billion five hundred million rupiah).
Another example is as follows: The taxpayer has submitted the annual income tax return for corporate income tax year 2023 with an overpayment status amounting to 1 billion rupiah. Upon submission of the LB Tax Return, the taxpayer is audited by the Tax Office. Based on the audit result, KPP issues SKPKB with an underpayment value of one billion rupiah. During the final discussion, the taxpayer did not agree with the entire underpayment value. However, after the audit, the taxpayer paid the SKPKB a sum of one billion rupiah before filing an objection. Based on the objection filed by the taxpayer, the Director General of Taxes issued an Objection Decision Letter by partially granting the taxpayer's objection so that the amount of overpayment in the Objection Decision Letter amounted to Rp1,250,000,000.00 (one billion two hundred fifty million rupiah).
Based on this, the overpayment amount is Rp2,250,000,000.00 consisting of overpayment based on objection decree amounting to Rp1,250,000,000 and the amount paid on SKPKB amounting to Rp1 billion. In this case, the Taxpayer is given an interest reward per month at the prevailing reference interest rate at the beginning of the interest reward calculation divided by 12 (twelve) for a maximum of 24 (twenty-four) months calculated from the amount of overpayment based on the Objection Decree, amounting to Rp1,250,000,000.00 (one billion two hundred fifty million rupiah).
Based on the description above, we can see that interest compensation is a form of legal equality between taxpayers and tax authorities (equality before the law). This is because if the taxpayer is wrong, a fine will be imposed by the tax authority. On the other hand, if the tax authority is not correct in applying the provisions, the tax authority will give an interest reward at market interest. That is a brief discussion related to the payment of interest. In the next article, we will discuss further the technical rules of the interest reward.
