Hello, is there anything we can help?
Quality Assurance (QA) in the realm of tax audits is a structured process that allows taxpayers to debate legal discrepancies that remain unresolved with tax auditors. As outlined in the Minister of Finance Regulation (PMK) Number 17 of 2013, which was subsequently refined through PMK Number 184/PMK.03/2015, QA enables taxpayers to challenge corrections based on legal grounds that were not settled during the Closing Conference. It is important to note that QA does not cover audits with concrete data, a narrow scope, and a clear legal basis.
The overarching aim of QA is to ensure high-quality audits by focusing discussions solely on unresolved legal basis. Taxpayers can initiate the QA process by sending a formal request to either the Head of the Regional Office or the Director of Tax Audit and Collection, depending on who conducted the audit. There are three specific scenarios where a QA submission is permissible:
- The Record of Closing Conference has been signed.
- The Minutes of Closing Conference have not been signed.
- There is a disagreement confined to the legal basis for correction.
Quality Assurance Submission Process
To proceed with a QA submission, taxpayers must submit an application letter directly or via fax within 3 (three) working days of the Record of Closing Conference being signed. This letter is then forwarded to the Head of the Tax Audit Unit.
Upon receiving the application, the QA team convenes a meeting with the taxpayer and the tax auditor to deliberate on the audit findings that remain contentious. The closing conference includes the QA team, the tax auditor team, and the taxpayer or their representative. Should the taxpayer fail to attend, the conference will still take place between the QA team and the tax auditor team.
The outcomes of the closing conference are documented in the Minutes of QA, which are signed by all parties involved. If the taxpayer declines to sign, the QA team records this refusal in the Minutes of QA.
The Minutes of QA, along with the Record of Closing Conference, serve as the foundation for the tax auditor to compile the final Minutes of Closing Conference, accompanied by a summary of the results.
Quality Assurance Team Structure
The QA team, comprising a chairman, a secretary, and three members appointed by the Director of Tax Audit and Collection or the Head of the Director General of Taxes (DGT) Regional Office, is tasked with mediating disputes between taxpayers and tax auditors during the Closing Conference. Their role involves reaching conclusions, making decisions, and documenting these outcomes in detailed minutes.
Practical Tips for Preparation
- Gather Complete Documentation:
- Tax Audit Chronology: Prepare detailed notes about the tax audit process, with each stage, including dates, participants, and outcomes, recorded.
- Supporting Documents: Gather correspondence and audit reports.
- Check Legal Basis:
- Legal Application Analysis: Scrutinize the legal framework underpinning the tax audit.
- Relevant Regulations: Identify regulations to either support or challenge the proposed adjustments.
- Prepare Presentation Materials:
- Clear Presentation: Write information distilled into concise slides for easy comprehension.
- Data Visualization: Use graphs and tables to illustrate data.
- Create a Tax Legal Opinion:
- Alignment Analysis: Provide legal opinions on the conformity of the auditor's decisions with tax regulations.
- Strong Argumentation: Prepare reasonable grounds for defending the taxpayer's stance.
QA Implementation Challenges
Based on our experience in QA submissions, despite being part of the DGT hierarchy, the QA team can sometimes lack complete independence. Taxpayers must navigate this by explaining the rules while urging the QA team to remain objective. Presenting clear, data-backed arguments is crucial to ensuring fair and unbiased decisions.
Effective communication and robust data are essential for the QA team to perform its duties efficiently.
