DGT Letters: What Can and Cannot Be Challenged in Tax Court
- October 24, 2024
- Posted by: Administrator
- Category:
Tax disputes often arise from communications between taxpayers and the Directorate General of Taxes (DGT), but not all DGT letters can be legally challenged in Tax Court. Only certain decisions meet the legal requirements for a lawsuit, and taxpayers should understand which letters qualify.
Legal Basis for a Tax Court Lawsuit
The Tax Court Law, Article 1 number 7, allows lawsuits against tax collection actions or decisions that meet the conditions set by tax regulations. According to Article 1 number 4, a “decision” is defined as a written determination by an authorized tax official under tax laws and related to enforcement activities. Further, Article 23 paragraph 2(c) of UU KUP clarifies that lawsuits can only be filed against decisions related to the implementation of tax decisions, excluding those outlined in Articles 25(1) and 26.
Although UU KUP and the Tax Court Law define the types of decisions that can be challenged, they do not provide detailed characteristics of such decisions. This is why the Administrative Court Law (UU PTUN) plays a key role in determining whether a DGT letter qualifies for a lawsuit.
Defining a Challengeable Decision Using UU PTUN
Since the Tax Court operates within the framework of the Administrative Court, many Court verdicts reference UU PTUN when defining a challengeable decision. Article 1 number 3 of UU PTUN sets out five key criteria for a decision to be eligible for a legal challenge:
- Written Determination: The decision must be formally documented
- Issued by an Authorized Official: The decision must be made by a government official in their administrative capacity
- Based on Legal Provisions: The decision must be grounded in law or regulation
- Concrete, Individual, and Final: The decision must be final, apply to a specific case or person, and have a tangible impact
- Legal Consequences: The decision must result in legal consequences for the taxpayer or legal entity.
Review Before Filing a Lawsuit: Does the DGT Letter Qualify?
Before filing a lawsuit, it is essential to verify that the DGT letter or decision meets the above criteria. Letters that fail to fulfill all five requirements outlined in UU PTUN are not legally eligible for a challenge in Tax Court.
For example, DGT letters that reject tax refund requests, such as those regulated under 187/PMK.03/2015, or letters denying the use of book value for asset transfers in mergers, may be eligible for legal action. However, routine letters, notifications, or communications that do not result in legal consequences generally do not qualify for a lawsuit.
Taxpayers should carefully assess DGT communications before taking legal action, ensuring they are contesting decisions that meet the necessary legal thresholds. Understanding these boundaries helps taxpayers protect their rights effectively while avoiding unnecessary lawsuits.
Disclaimer:
This communication contains general information only. Before making any decision or taking any action that may affect your tax and finances or your business, you should consult a qualified professional adviser. GNV shall not be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication.
Author : Ahdianto