Tax objection and its’ problematics

In Indonesia, taxation provisions on tax objection are governed in Act Number 6 Year 1983 concerning General Definitions and Taxation Procedures as several times amended lastly by Act Number 16 Year 2009, especially Article 25, 26, and 26 A and its’ implementing regulations.

In brief the provisions on tax objection are as follows:

Taxpayers may lodge a tax objection to the Director General of Taxes shall only for the following matters:

  1. Notice of Tax Under payment Assessment;
  2. Notice of an Additional Tax Under payment Assessment;
  3. Notice of Nil Tax Assessment;
  4. Notice of Tax Over payment Assessment;
  5. Withholding by third parties under the provisions of the tax laws.

Requirements for lodging a tax objection

  1. Objections shall be submitted  in writing in Indonesian Language by stating the amount  of tax payable,  the  amount  of tax withheld,  or the  amount  of losses  as calculated  by the taxpayers, supported by clear reasons.
  2. Objections shall be filed within 3 months from the date  of sending of the notice of tax assessment or  the  date  of tax withholding  by third parties, unless  the taxpayers  can  demonstrate that  the period  cannot  be  fulfilled  due  to circumstances beyond their control.
  3. In  case  a taxpayer  files an objection  for a notice  of tax assessment, the  taxpayer  shall settle  the  tax payable  at  least  to  the  amount  of tax as agreed  by the  taxpayer  in the closing conference of a tax audit, prior to the submission of objection request.

Objection that  does not meet  the requirements above shall  not  constitute  valid  objection,  and  as  such  will  not  be  taken  under consideration.

The obligations of the Director General of Taxes in connection with tax objection

  1. If requested by taxpayers for the purpose of submitting objections, the Director General of Taxes shall be obliged to provide written information on matters, which constitute the basis for imposition of tax, calculation of losses, or withholding of tax.
  2. The Director General of Taxes within 12 months as from the date of receipt of the objection application shall make a decision on the submitted objection. Where the period as mentioned above has elapsed and the Director General of Taxes has not made any decision, the requested objections are considered granted.

Other important provisions

  • Financial  accounts,  notes,  data,  or  other  information  disclosed  by  taxpayer  in  the objection process  that  are not disclosed during audit process,  with the exception  of data and information  that  are not possessed  by taxpayer during the  audit process,  are not to be considered in the objection decision.
  • The amount of unpaid tax at the time of request for objection does not constitute as tax liabilities.
  • In  case the  objection requested by taxpayer  is disapproved  or partially granted, the taxpayer  shall  be  imposed  with  an  administrative  penalty  in  the  form  of  50%  fine of the  amount  of tax as specified  by the  Decision on Objection minus the amount of tax paid prior to the objection request. In case a taxpayer requests for an appeal, the administrative penalties in the form of 50% fine shall not be imposed.


  • Tax objection is one of the means given to the taxpayer to look for justice and truth when he found he had improperly taxed. However, in fact the tax objections are processed by the same government institution that also conducting tax audit and conducting tax assessment. Hence, in practical experience almost 90% of the tax objections raised by the taxpayer were rejected. Consequently, the tax objection lodged by taxpayers are potentially rejected and the taxpayers potentially shall bear the risk to pay more taxes due to administrative fine of 50% in case the objection is rejected.
  • In accordance with the principles of triad politics adopted by Indonesia, the tax objection as quasi-judicial should be processed by different institutions with institutions that conducting tax assessment. In other words the objection shall be processed by institution which is not under the Directorate General of Taxes organization.
  • Documents those are not disclosed during the tax audit process shall not be considered in the objection decision. To my opinion, this provision is not fair. What if the documents in question were not requested by the tax auditors during the tax audit process, whereas the documents were related to the fiscal correction made by the tax auditors. Those documents are very important evidences which can be used by the taxpayer to support the reasons for the objection.

About Jaja Zakaria

Nama saya Jaja Zakaria, saya tinggal di Depok, Jawa Barat, kurang lebih 40 km dari Jakarta Selatan. Saya alumni Fakultas Hukum Universitas Gadjah Mada, Yogayakarta, dan Opleidings Instituut Financien, Den Haag, Belanda di bidang Hukum Pajak Internasional. Saya pengarang beberapa buku, e-book, dan makalah-makalah perpajakan. Pengalaman saya antara lain pernah menjadi anggota delegasi Indonesia dalam perundingan Perpajakan dengan Denmark, Mesir, Kanada, Uni Emirat Arab, Kuwait, Turki, Brunei Darussalam, Pilipina, Vietnam, Mongolia, dan Taiwan; dalam Study Group on Asian Tax Administration and Research (SGATAR) meeting; dan dalam Joint Commission Indonesia - China. Saya juga anggota International Word Tax Expert.

Posted on December 5, 2013, in English Version, Taxation Topic and tagged , . Bookmark the permalink. 23 Comments.

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