Technical Guidelines for the Acceleration of Preliminary Refund of Excess Tax

Jakarta, Ideatax -- In the 2021 Annual Report, DGT (2022) reported an increase in tax refunds in 2021. For example, in 2021, the amount of tax refund (restitution) reported by DGT was IDR 196.10 trillion. Meanwhile, in 2020, the amount of restitution reported by the DGT was IDR 171.99 trillion. In other words, there was an increase in restitution of 14.02% in 2021.

The primary legal basis for granting tax refunds is Article 17 of Law Number 6 of 1983 concerning General Provisions and Tax Procedures, as amended by Law 7 of 2021. In this regulation, there are at least three types of tax refunds:

1. Specific criteria tax refunds (Article 17C)
2. Specific requirements tax refunds (Article 17D), and
3. Tax refunds other than specific criteria and requirements (17B)

 

A tax refund with specific criteria (Article 17C) is a tax refund given to taxpayers who meet the specific criteria, including being on time in submitting tax returns, not having tax arrears, having financial statements audited by a tax accountant with an unqualified opinion, and never being convicted in the field of taxation.

Meanwhile, a tax refund with specific requirements is given to taxpayers who meet specific requirements, including individual taxpayers who do not run a business or free work; taxpayers who run a business or free work with a certain amount of gross turnover; corporate taxpayers with a certain amount of business turnover and an overpayment amount up to a certain amount; and taxable entrepreneurs who submit SPT.

On the other hand, refunds other than those given to taxpayers with specific criteria and requirements are tax refunds granted to taxpayers who do not meet specified criteria and requirement as referred to in Articles 17C and 17D of the KUP Law.
Taxpayers who meet the specific criteria and certain requirements as above are entitled to a preliminary refund of excess tax for a maximum of three months from the time the application is received for refund applications for income tax and a maximum of one month for refund applications for value-added tax.

 

Derivative Rules of Article 17 of the KUP Law
The provisions of Article 17 of the KUP Law regarding the preliminary refund are further derived into the Minister of Finance Regulation Number 39/PMK.03/2018 concerning Procedures for Preliminary Refund of Tax Overpayments as amended several times, most recently by Minister of Finance Regulation Number 209/PMK.03/2021.

In this provision, there is no significant change related to taxpayers with specific criteria (Article 17C). However, related to taxpayers with specified requirements, the provision stipulates that there are four requirements for taxpayers who want to submit a preliminary refund with a specific requirement mechanism (Article 17D), including individual taxpayers who do not run a business or free work who file Annual Income Tax Return with an overpayment of restitution, individual taxpayers that run a business or free work who file Annual Income Tax Return with an overpayment of restitution with the amount of overpayment at most IDR 100,000,000.00 (one hundred million rupiahs), Corporate Taxpayer who files Annual Income Tax Return with an overpayment of restitution in the amount of overpayment at most Rp1,000,000,000.00 (one billion rupiahs), Taxable Entrepreneur who files Periodic Value Added Tax Return with an overpayment of restitution in the amount of overpayment at most Rp5,000,000,000.00 (five billion rupiahs).

 

Accelerated Returns: A Breakthrough
To provide convenience and legal certainty, as well as to accelerate taxpayers' cash flow, in 2023, the government provided a breakthrough in the form of an accelerated preliminary refund. Through the Regulation of the Director General of Taxes number PER-5/PJ./2023 on the Acceleration of Refund of Tax Overpayment, the government cuts the period of preliminary refund for taxpayers who meet specific requirements (Article 17D) to fifteen working days (Ministry of Finance, 2023).

 

Technical Provisions for Preliminary Refund
Recently, the government issued a circular letter to the Director General of Taxes Number 10/PJ/2023 concerning improvements to the implementation of the acceleration of refunds of tax overpayments.
Through this provision, the government, among others, regulates that individual taxpayers who submit an annual income tax return with a maximum overpayment amount of IDR100,000,000.00 (one hundred million rupiah) and apply for a refund of their tax overpayment by marking the box:

• Restituted based on Article 17B of KUP Law; or
• Refunded with SKPPKP based on Article 17D of the KUP Law accelerated refund of tax overpayment through the issuance of SKPPKP after research.

The provision also stipulates that individual taxpayers who submit restitution with a restitution value of a maximum of one hundred million rupiah being audited may be given an acceleration of the preliminary refund, provided that the SPHP has not been filed with the taxpayer.

Furthermore, this provision also technically regulates the research conducted by DGT related to the application for acceleration of preliminary refund of tax overpayment as referred to in Article 17D. There are three research clusters performed by DGT related to prior research, namely:

1. Researching the correctness of tax-writing and calculation,
2. Examining evidence of withholding or withholding of income tax credit by the applicant taxpayer, and
3. Researching the validity of the state revenue transaction number (NTPN) for tax paid by the taxpayer.

Taxpayers can prepare several things in order for their refund request to be accepted:

1. Taxpayers need to ensure that the income stated in the tax return is supported by supporting documents
2. Taxpayers need to ensure that the amount of Net Income Calculation Norm (NPPN) used in the tax return is determined by the previously submitted NPPN notification
3. Taxpayers need to ensure that the amount of PTKP, zakat, or religious donation and the rates used are appropriate

 

Related Provisions

• Law Number 6 of 1983 concerning General Provisions and Tax Procedures, as last amended by Law Number 7 of 2021 concerning Harmonization of Tax Regulations
• Minister of Finance Regulation Number 39/PMK.03/2018 concerning Procedures for Preliminary Refund of Tax Overpayments, as amended several times, most recently by Minister of Finance Regulation Number 209/PMK.03/2021
• Regulation of the Director General of Taxes number PER-5/PJ/2023 concerning the Acceleration of Refund of Excess Tax Payment
• Circular Letter of the Director General of Taxes Number 10/PJ/2023 Concerning Improvements to the Implementation of the Acceleration of Refunds of Tax Overpayments

 

References
DJP. (2022). Annual Report 2022. Jakarta: Direktorat Jenderal Pajak.
Kemenkeu. (2023, Agustus 3). Menkeu: Percepatan Pengembalian Kelebihan Pembayaran Pajak dari Setahun Jadi 15 Hari . Retrieved from Kemenkeu: https://www.kemenkeu.go.id/informasi-publik/publikasi/berita-utama/Pengembalian-Kelebihan-Pembayaran-Pajak