Indonesia's Minister of Finance issued a new regulation, Minister of Finance Regulation No. 177/PMK.03/2022 ("Regulation"), which provides taxpayers with more certainty during pre-investigation tax audit procedures. The Regulation includes several new provisions, such as a shorter timeline for completing the audit and a mandatory request for clarification from taxpayers on potential state loss due to a tax crime. Additionally, tax auditors must notify taxpayers of the audit results, which can either escalate the process into an investigation or close the case if no evidence of a tax crime is found.
Taxpayers should cooperate with the tax authority during a pre-investigation audit and admit to any mistakes and pay the underpaid tax plus a 100% penalty to prevent the escalation of the case to an investigation. If a mistake is not admitted and the case is escalated to an investigation, any admission by the taxpayer will be subject to a penalty of up to 400% of the underpaid tax.
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