Procedure for Preliminary Refund of Tax Overpayment

On 12 April 2018, the Ministry of Finance issued a new Regulation No. 39/PMK.03/2018 (“PMK-39”) regarding the new rules for the procedure for preliminary refund of tax overpayment.

For the sake of legal certainty and justice, the MoF has stipulated the procedure under one regulation, which was currently regulated under different regulations.  The new regulation also revokes the following regulations:

• MoF Regulation No. 71/PMK.03/2010;
• MoF Regulation No. 72/PMK.03/2010;
• Articles 18A of MoF Regulation 147/PMK.04/2011 and its amendments;
• MoF Regulation No. 74/PMK.03/2012; and
• MoF Regulation No. 198/PMK.03/2013.

Taxpayers that meet criteria as Golden Taxpayers, Taxpayers with low refund request, or low-risk VAT-able firm, are allowed to enjoy a preliminary tax refund.

To be appointed as a Golden Taxpayer or low-risk VATable firm, the taxpayers must submit an application to the tax office where it is registered.  On the other hand, a taxpayer with low refund value can submit its preliminary tax refund request through the relevant tax return without the need to submit a request to the tax office.

The tax office can do a tax audit on the tax year or period that has been granted a preliminary tax refund.  If the tax audit results in a tax underpayment, there will be an administrative penalty of 100% for Golden Taxpayers, 100% for taxpayers with a low refund value, and interest of 2% / month with a maximum of 48%.

To be designated as a Taxpayer with Certain Criteria, the Taxpayer shall submit an application to the Tax Office where the Taxpayer is registered. The issuance of the decision on the determination of the Taxpayer with Certain Criteria shall be made no more than 1 (one) month after the receipt of the request for determination. If up to the deadline the Director General of Taxes has not made a decision, the Taxpayer’s request shall be deemed to be granted and the Director General of Taxation shall issue the decision on the determination of the Taxpayer with Certain Criteria.

Determinations of Taxpayers with Certain Criteria or Low Risk Taxable Entrepreneurs that are still valid at the time this Regulation is enacted should be reconfirmed by the Director General within no longer than 1 (one) month from when this Ministerial Regulation comes into force.