The Indonesian government has updated the mechanism for filing tax objections through Ministry of Finance Regulation No. 118 of 2024 on Procedures for Correction, Objection, Reduction, Cancellation, and Annulment in the Tax Sector (PMK 118/2024).
Replacing PMK 9/2013 (as amended by PMK 202/2015), this regulation introduces several major shifts in how tax disputes are resolved.
So, what are the key changes to the tax objection process under PMK 118/2024? Here is a complete breakdown.
What Is a Tax Objection?
A tax objection is a legal remedy available to taxpayers who disagree with a Notice of Tax Assessment (Surat Ketetapan Pajak or SKP), third-party tax withholding/collection, or a Land and Building Tax (PBB) assessment issued by the Directorate General of Taxes (DGT).
The legal basis for filing an objection is governed by Article 25 of the General Tax Provisions and Procedures Law (UU KUP), while the technical procedures now fall under PMK 118/2024.
Generally, an objection is raised when a taxpayer disputes the audit findings outlined in the SKP. Prior to issuing an SKP, the DGT issues a Notice of Audit Findings (SPHP) and conducts a closing conference with the taxpayer to discuss the results.
7 Key Changes to the Tax Objection Mechanism in PMK 118/2024
- Right to Request Clarification on the Tax Base
Taxpayers eligible to file an objection against an SKP have the explicit right to submit a formal Request for Clarification regarding the Tax Assessment Base, as stipulated in Article 12(1). The DGT is required to respond within 1 month of receiving the request.
- Administrative Shift in Data Submission
Under PMK 118/2024, if a taxpayer cannot provide all or part of the requested data, documents, or information, they must now submit an official Statement Letter (Surat Pernyataan). Previously, this condition was documented via an official minutes report (Berita Acara) drafted by the DGT.
- Simultaneous MAP and Objection Filings Prohibited
If a Mutual Agreement Procedure (MAP) and a tax objection involve the exact same disputed matter, PMK 118/2024 requires the taxpayer to withdraw the objection request before the Notice to Attend (SPUH) is issued. If there are other disputed matters not covered by the MAP, the taxpayer must adjust the scope of their objection prior to the issuance of the SPUH.
The DGT will approve or reject the adjusted scope within 1 month. Consequently, PMK 118/2024 no longer allows simultaneous processing of an objection and a MAP for identical dispute items.
- Reduced Administrative Penalties
The administrative penalty for an unsuccessful objection has been reduced from 50% down to 30% of the tax due under the Objection Decision, minus any tax paid prior to filing the objection.
Note: This penalty reduction does not apply to objection decisions regarding Land and Building Tax (PBB) Tax Due Notices (SPPT) or PBB Assessment Notices (SKP).
- Clearer Evidentiary Rules for PBB Objections
PMK 118/2024 establishes specific rules regarding the treatment of documents and records in PBB objection proceedings—an area unaddressed under the previous framework.
Documents requested during an audit but withheld by the taxpayer will not be considered during the objection process, unless they were held by a third party and unobtainable during the audit. Additionally, any new documents requested by the DGT during the objection phase or voluntarily submitted by the taxpayer will be admissible.
- Electronic Objection Filing via Coretax
Taxpayers can now submit objection requests electronically through Coretax. However, filing via registered mail remains a valid option, consistent with the rules under PMK 9/2013.
- New Provision for Tax Appeals
To prepare for an appeal, taxpayers may request an official statement detailing the underlying grounds of the Objection Decision. The DGT must respond to this request within 1 month of receipt.
Types of Tax Assessments Subject to Objection
Pursuant to Article 9 of PMK 118/2024, taxpayers may file an objection against:
- Underpayment Tax Assessment Notice (SKPKB)
- Additional Underpayment Tax Assessment Notice (SKPKBT)
- Zero Tax Assessment Notice (SKPN)
- Overpayment Tax Assessment Notice (SKPLB)
- Third-party tax withholding or collection
- Land and Building Tax Due Notice (SPPT PBB)
- Land and Building Tax Assessment Notice (SKP PBB)
Objections can only be filed against the substantive content of an assessment, such as the tax amount due, the recorded fiscal loss, or the amount of tax withheld/collected.
Conclusion
While PMK 118/2024 does not alter a taxpayer’s fundamental right to object, it significantly modernizes the dispute resolution framework. The regulation grants taxpayers new rights to request tax base clarifications, opens electronic submission channels via Coretax, clarifies the interplay between objections and MAPs, lowers administrative penalties from 50% to 30%, and sets clear evidentiary rules for PBB objections and subsequent tax appeals.
By understanding these regulatory updates, taxpayers can better prepare their filings, ensure full administrative compliance, and build a more effective tax dispute strategy under the latest legal framework.
