Attn.

1.

Echelon II Officials within the Head Offices of the Directorate General of Taxes;

 

2.

Heads of Regional Offices within the Directorate General of Taxes;

 

3.

Heads of Tax Offices within the Directorate General of Taxes.

 

 

 

 

 

 

 

 

 

 

 

Supervision of Taxpayers’ compliance is one of the Directorate General of Taxes’ functions. To carry out the said function, the Director General of Taxes has issued several Director General of Taxes Circular Letters stipulating the business process of supervising Taxpayers’ compliance, including:

 

1.

Director General of Taxes Circular Letter Number SE-03/PJ.33/2000 concerning the Issuance of Reprimand Letters (SE-03/PJ.33/2000);

 

2.

Director General of Taxes Circular Letter Number SE-26/PJ/2007 concerning the Optimisation of Tax Data Utilisation (SE-26/PJ/2007);

 

3.

Director General of Taxes Circular Letter Number SE-27/PJ/2012 concerning the Supervision of Periodic Payments (SE-27/PJ/2012);

 

4.

Director General of Taxes Circular Letter Number SE-37/PJ/2015 concerning the Supervision of New Taxpayers (SE- 37/PJ/2015);

 

5.

Director General of Taxes Circular Letter Number SE-39/PJ/2015 concerning Taxpayer Supervision in the Form of Explanation of Data and/or Information and Visits to Taxpayers (SE-39/PJ/2015);

 

6.

Director General of Taxes Circular Letter Number SE-62/PJ/2015 concerning Operational Implementation of the Center for Tax Analysis Team (SE-62/PJ/2015);

 

7.

Director General of Taxes Circular Letter Number SE-49/PJ/2016 concerning Taxpayer Supervision Through Information Systems (SE-49/PJ/2016); and

 

8.

Director General of Taxes Circular Letter Number SE-07/PJ/2020 concerning Supervision and Audit Policies in the Context of Database Expansion (SE-07/PJ/2020).

 

 

 

 

 

 

 

 

 

 

 

 

In line with the ongoing dynamic developments, changes in the organisation and work procedures of the Directorate General of Taxes vertical agencies and based on monitoring and evaluation results as well as taking into account input from stakeholders, it is necessary to improve the business process of supervising Taxpayers' compliance. These improvements are aimed at optimizing business processes for supervision, accommodating developments in information technology and aligning with the Directorate General of Taxes’ other business processes, including audits, intelligence, law enforcement and other business processes.

Further, the business process of supervising Taxpayers' compliance is improved by integrating the provisions under SE-03/PJ.33/2000, SE-27/PJ/2012, SE-26/PJ/2007, SE-37/PJ/2015, SE-39/PJ/2015, SE-62/PJ/2015, SE-49/PJ/2016 and SE-07/PJ/2020 in a Director General of Taxes Circular Letter as well as aligning them with the provisions under several Directors General of Taxes Circular Letters, including:

 

1.

Director General of Taxes Circular Letter Number SE-10/PJ/2015 concerning Administrative Guidelines for the Development, Utilisation and Monitoring of Data;

 

2.

Director General of Taxes Circular Letter Number SE-14/PJ/2018 concerning Taxpayer Supervision Post Tax Amnesty;

 

3.

Director General of Taxes Circular Letter Number SE-15/PJ/2018 concerning Audit Policies;

 

4.

Director General of Taxes Circular Letter Number SE-14/PJ/2019 concerning Procedures for Extensification;

 

5.

Director General of Taxes Circular Letter Number SE-18/PJ/2019 concerning Procedures for the Implementation of Tax Intelligence and Observation Activities;

 

6.

Director General of Taxes Circular Letter Number SE-11/PJ/2020 concerning Field Data Collection and Data Quality Assurance in the Context of the Broadening of Tax Basis;

 

7.

Director General of Taxes Circular Letter Number SE-39/PJ/2021 concerning the Implementation of Compliance Risk Management and Business Intelligence; and

 

8.

Director General of Taxes Circular Letter Number SE-02/PJ/2022 concerning the Implementation of Minister of Finance Regulation Number 48/PMK.03/2021 concerning Procedures for the Registration, Reporting and Data Collection of Taxable Objects of Land and Building Tax.

 

 

 

 

 

 

 

 

 

 

 

 

This alignment is required to provide uniformity and continuity in the implementation of the business process of supervising Taxpayers’ compliance.

Based on the aforementioned considerations, it is necessary to formulate a Director General of Taxes Circular Letter that stipulates the business process of supervising Taxpayers' compliance using an end-to-end approach, which consists of planning, implementation, follow-up as well as monitoring and evaluation of supervision, to render a comprehensive approach to realize sustainable Taxpayers' compliance with statutory tax provisions as well as to support the achievement of optimal tax revenues.

 

 

 

 

 

 

 

 

 

 

 

 

1.

Purpose

 

 

This Director General of Taxes Circular Letter is intended as guidelines for the implementation of the business process of supervising Taxpayers' compliance in an end-to-end manner, thereby, within its implementation, there is uniformity and continuity.

 

2.

Objectives

 

 

This Director General of Taxes Circular Letter aims to improve the efficiency and effectiveness of supervision to realize sustainable Taxpayers' compliance with statutory tax provisions as well as to support the achievement of optimal tax revenues.

 

 

 

 

 

 

 

 

 

 

 

 

The scope of this Director General of Taxes Circular Letter is as follows:

 

1.

definitions;

 

2.

general provisions;

 

3.

Taxpayer supervision planning, which includes:

 

 

a.

preparing supervision plans; and

 

 

b.

setting supervision priorities;

 

4.

Taxpayer supervision implementation, which includes:

 

 

a.

formal Compliance Examination;

 

 

b.

material Compliance Examination;

 

 

c.

inquiry; and

 

 

d.

visits to Taxpayers;

 

5.

Taxpayer supervision follow-up, which includes:

 

 

a.

proposed audit;

 

 

b.

proposed preliminary audit;

 

 

c.

proposed observation and/or intelligence operations;

 

 

d.

proposed valuation for tax purposes;

 

 

e.

proposed ex officio changes to Taxpayer’s data and/or status;

 

 

f.

proposed ex officio changes in the administration of tax services and/or facilities for Taxpayers;

 

 

g.

notification to Taxpayers; and

 

 

h.

proposed ex officio amendments to legal products;

 

6.

monitoring and evaluation of Taxpayer supervision; and

 

7.

other provisions.

 

 

 

 

 

 

 

 

 

 

 

 

1.

Law Number 6 of 1983 concerning General Provisions and Tax Procedures as amended several times, last amended by Law Number 7 of 2021 concerning the Harmonisation of Tax Regulations (General Provisions and Tax Procedures Law);

 

2.

Law Number 7 of 1983 concerning Income Tax as amended several times, last amended by Law Number 7 of 2021 concerning the Harmonisation of Tax Regulations (Income Tax Law);

 

3.

Law Number 8 of 1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods as amended several times, last amended by Law Number 7 of 2021 concerning the Harmonisation of Tax Regulations (VAT Law);

 

4.

Law Number 12 of 1985 concerning Land and Building Tax as amended by Law Number 12 of 1994 concerning the Amendment to Law Number 12 of 1985 concerning Land and Building Tax;

 

5.

Law Number 11 of 2016 concerning Tax Amnesty;

 

6.

Law Number 9 of 2017 concerning the Enactment of Government Regulation in Lieu of Law Number 1 of 2017 concerning Access to Financial Information for Tax Purposes into a Law;

 

7.

Law Number 2 of 2020 concerning the Enactment of Government Regulation in Lieu of Law Number 1 of 2020 concerning State Financial Policy and Financial System Stability to Control Corona Virus Disease 2019 (COVID-19) Pandemic and/or In Response to Dangerous Threats to the National Economy and/or the Stability of the Financial System

 

8.

Law Number 10 of 2020 concerning Stamp Duty;

 

9.

Minister of Finance Regulation Number 210/PMK.01/2017 concerning the Organisation and Work Procedures of the Vertical Agencies of the Directorate General of Taxes as amended by Minister of Finance Regulation Number 184/PMK.01/2020;

 

10.

Minister of Finance Regulation Number 45/PMK.01/2021 concerning Account Representatives at Tax Offices; and

 

11.

Minister of Finance Regulation Number 118/PMK.01/2021 concerning the Organisation and Work Procedures of the Ministry of Finance.

 

 

 

 

 

 

 

 

 

 

 

 

1.

Definitions

 

 

Referred to herein this Director General Circular Letter:

 

 

a.

Analysis is the activity of processing data and/or information into comprehensible and useful conclusions.

 

 

b.

Tax Data Analysis is an Analysis to identify arising non-compliance modes and estimated potential tax obligations that have not been fulfilled and subsequently determine follow-up recommendations to support the implementation of Supervision.

 

 

c.

Taxpayer Assignment is an activity of allocating Taxpayers to Tax Offices employees with the duties and functions of Supervision/ Tax Supervision Team.

 

 

d.

Official Report of Explanation of Data and/or Information, hereinafter referred to as Official Report, is an official report containing the implementation of the submission of an explanation on SP2DK by the Taxpayers and/or the implementation of the Conference.

 

 

e.

Official Report of Amendments is an official report containing amendments to the KKPt and/or LHPt, cancellation of the issuance of the SP2DK and/or amendments to the SP2DK Report in the Supervision Information System.

 

 

f.

List of Supervision Priorities, hereinafter abbreviated to DPP, is a list of Taxpayers that will be subject to material Compliance Examination by the Tax Office in the current year.

 

 

g.

List of Tax Data Analysis Targets, hereinafter referred to as DSA, is a list of Taxpayers that will be subject to tax data analysis in the current year.

 

 

h.

List of Audit Priority Targets, hereinafter abbreviated to DSPP, is a list of Taxpayers that will be audited throughout the current year.

 

 

i.

List of Priority Targets for Tax Revenue Optimisation, hereinafter abbreviated to DSP3, is a list of Taxpayers constituting the output of Compliance Risk Management as priority targets for potential optimisation throughout the current year, either through Supervision or audits.

 

 

j.

Data and/or Information are data and/or information obtained or held by the Directorate General of Taxes from the information system belonging to the Directorate General of Taxes, Tax Returns, information tools, results of visits, results of Field Data Collection (KPDL), Data and/or Information from Agencies, Institutions, Associations or Other Parties (ILAP), results of the development and analysis of Information, Data, Reports and Complaints (IDLP), internet and other data and/or information with tax material substance and may be followed up with Material Compliance Examination.

 

 

k.

Analysis Working Sheet, hereinafter abbreviated to KKA, is a detailed and clear record of Tax Data Analysis.

 

 

l.

Examination Working Sheet, hereinafter abbreviated to KKPt, is a detailed and clear record of the implementation of Material Compliance Examination by Tax Office employees who have the duties and functions of the Tax Supervision/Supervision Team.

 

 

m.

Taxpayer Compliance Committee at the DGT Head Office level, hereinafter referred to as the DGT Head Office Compliance Committee, is a committee that functions to plan, supervise and evaluate the increase of Taxpayers’ compliance at the national level, which consists of the Director General of Taxes as the chairperson of the committee and whose members consist of the Director of Tax Potential, Compliance, and Revenue (PKP), the Director of Tax Extensification and Valuation (EP), Director of Tax Data and Information (DIP), Director of Tax Intelligence (IP), Director of Tax Audit and Collection (P2), Director of Law Enforcement (Gakum) and Director of Internal Compliance and Apparatus Transformation (KITSDA).

 

 

n.

Taxpayer Compliance Committee at the DGT Regional Office level, hereinafter referred to as the DGT Regional Office Compliance Committee, is a committee at the DGT Regional Office that functions to plan, supervise and evaluate the increase of Taxpayers’ compliance at the DGT Regional Office level, which consists of the Head of the DGT Regional Office as the chairperson of the committee and whose members at least consist of Data and Potential Supervision Division Division (DP3), the Head of the Tax Registration, Extensification and Valuation Division (PEP), the Head of the Audit, Collection, Intelligence and Investigation Division Division (P2IP) and the Head of the General Affairs Division, according to the assignment by the Head of the DGT Regional Office.

 

 

o.

Taxpayer Compliance Committee at the Tax Office level, hereinafter referred to as the Tax Office Compliance Committee, is a committee that functions to plan, supervise and evaluate the increase of Taxpayers’ compliance at the Tax Office level, which consists of the Head of the Tax Office as the chairperson of the committee and whose members at least consist of Head of the Tax Section of Tax Audit, Valuation and Collection, Heads of the Tax Section of Tax Supervisions I to VI, Head of the Section of Data Quality Assurance, Head of the General Affairs and Internal Compliance Subdivision and Auditor Functional Supervisor, according to the assignment by the Head of the Tax Office.

 

 

p.

New Tax Office is the Tax Office that accepts the transfer of Taxpayers and/or Taxable Persons from the Former Tax Office.

 

 

q.

Former Tax Office is a Tax Office where Taxpayers were registered and/or registered as Taxable Persons before the Taxpayers are registered and/or registered as Taxable Persons in the New Tax Office.

 

 

r.

Visits to Taxpayers, hereinafter referred to as Visits, are activities carried out by employees of the Directorate General of Taxes assigned to visit the residence, domicile, place of business and/or independent personal services of Taxpayers and/or other places deemed necessary and related to the Taxpayers.

 

 

s.

Analysis Report, hereinafter abbreviated to LHA, is a concise and clear report containing the implementation and results of Tax Data Analysis.

 

 

t.

Visit Report, hereinafter abbreviated to LHK, is a concise and clear report containing the implementation and results of a Visit.

 

 

u.

Examination Result Report, hereinafter abbreviated to LHPt, is a concise and clear report containing the implementation and results of Material Compliance Examination by Tax Office employees who have the duties and functions of the Tax Supervision/Supervision Team.

 

 

v.

Explanation of Data and/or Information Result Report, hereinafter abbreviated to LHP2DK, is a concise and clear report containing the implementation and results of the Request for an Explanation of Data and/or Information.

 

 

w. 

Tax Reports are documents reported by Taxpayers in the context of fulfilling their tax obligations, including Tax Returns, Notices of Taxable Objects (SPOP) and other reports.

 

 

x.

Tax Intelligence Information Sheet, hereinafter abbreviated to LIIP, is a document used for the dissemination of data and/or information prepared based on the Tax Intelligence Report.

 

 

y.

Conference with Taxpayers, hereinafter referred to as Conference, is an activity in Request for an Explanation of Data and/or Information to discuss Data and/or Information with Taxpayers and to provide direction/advice by the Tax Office in respect of the fulfillment of tax obligations by Taxpayers.

 

 

z.

Formal Compliance Examination is the Examination of Taxpayers’ compliance in fulfilling tax obligations/formal tax provisions stipulated under statutory tax provisions.

 

 

aa.

Material Compliance Examination is the Examination of Taxpayers’ compliance in fulfilling tax obligations/material provisions stipulated under statutory tax provisions.

 

 

bb.

Comprehensive Examination is Material Compliance Examination of Strategic Taxpayers through Examination on all taxes in the Examination scope, including through business process analysis, financial statement analysis and/or Transfer Pricing analysis, involving the Auditor Functional Supervisor for the Tax Year prior to the current Tax Year.

 

 

cc.

Thorough Examination is Material Compliance Examination of Other Taxpayers through the Examination of all taxes in the Examination scope, including through business process analysis, financial statement analysis and/or Transfer Pricing analysis without involving the Auditor Functional Supervisor for the Tax Year prior to the current Tax Year.

 

 

dd.

Company Group Examination is Comprehensive Examination or Thorough Examination of two or more Taxpayers in a company group registered in one or more Tax Offices, for which Examination is carried out simultaneously and in a coordinated manner.

 

 

ee.

Supervision of Taxpayers’ compliance, hereinafter referred to as Supervision, is a series of activities of developing and verifying the fulfillment of tax obligations, whether those that will be, have not yet been or have already been implemented by Taxpayers, in the context of realizing sustainable Taxpayers' compliance with statutory tax provisions.

 

 

ff.

Periodic Payment Supervision, hereinafter abbreviated to PPM, is Taxpayer supervision through Formal Compliance Examination which is due in the current Tax Year and Material Compliance Examination of the current Tax Year and Visits.

 

 

gg.

Material Compliance Supervision, hereinafter abbreviated to PKM, is Taxpayer supervision through Formal Compliance Examination which is due before the current Tax Year and Material Compliance Examination, among others through tax data analysis activities of the Tax Year prior to the current Tax Year as well as Visits.

 

 

hh.

Request for an Explanation of Data and/or Information, hereinafter referred to as P2DK, is an activity to request an explanation from Taxpayers on Data and/or Information based on Material Compliance Examination showing indications of non-compliance and tax obligations that have not been fulfilled pursuant to statutory tax provisions.

 

 

ii.

Company Group is a group of two or more Taxpayers in a company group consisting of related parties pursuant to the provisions under Article 18 paragraph (4) of the Income Tax Law and/or Article 2 paragraph (2) of the VAT Law or non-related parties but are known as a company group.

 

 

jj.

Compliance Risk Management Risk Map, hereinafter referred to as CRM Compliance Risk Map, is a matrix/map resulting from the Compliance Risk Management business process that describes the combination of the likelihood level and the consequence level and contains the value of the Taxpayer Compliance Risk based on the combination of elements of the likelihood level and consequence level.

 

 

kk.

Section of Tax Supervision is a section that has the duties and functions of Supervision of Strategic Taxpayers and Other Taxpayers as stipulated in the Director General of Taxes Decree concerning the distribution and determination of the detailed duties of the Section of Tax Supervision at the Tax Office.

 

 

ll.

Supervisor is an Auditor Functional Supervisor or Supervisor of the Tax Supervision Team.

 

 

mm.

Tax Return, hereinafter referred to as SPT, is a letter used by Taxpayers to file the calculation and/or payment of taxes, taxable objects and/or non-taxable objects and/or assets and liabilities pursuant to statutory tax provisions.

 

 

nn.

SP2DK, hereinafter abbreviated to SP2DK, is a letter issued by the Head of the Tax Office to Taxpayers concerning in the context of implementing the Request for an Explanation of Data and/or Information.

 

 

oo.

Submission date is the sending date of facsimile, postmark date, the date listed in the proof of postage through postal/courier/forwarder services or the date on which a document and/or information is submitted directly to Taxpayers.

 

 

pp.

Tax Supervision Team is a team consisting of the Head of the Section of Tax Supervision as the Supervisor and Tax Auditor Functional Officer that assess tax compliance in Material Compliance Examination and Request for an Explanation of Data and/or Information as well as Visits to the tax supervision sub-element as the chairperson and team members.

 

 

qq.

Validation is an activity of assessing the reliability and accuracy of data/information and/or determining the follow-up to data/information.

 

 

rr.

Branch Taxpayers Without Head Offices are Taxpayers with a branch status that are not in the same Tax Office as Taxpayers with the head office status.

 

 

ss.

Other Taxpayers are:

 

 

 

1)

Taxpayers that already have Taxpayer Identification Numbers, consisting of:

 

 

 

 

a)

Government Agency, Joint Operation, Customs Service Company (PPJK) Taxpayers and Branch Taxpayers Without Head Offices; and

 

 

 

 

b)

Taxpayers other than the Taxpayers referred to in letter a) and other than Strategic Taxpayers.

 

 

 

2)

Taxpayers that do not yet have Taxpayer Identification Numbers.

 

 

tt.

Strategic Taxpayers are:

 

 

 

1)

all Taxpayers registered with the Tax Offices within the Directorate General of Taxes Large Taxpayers Regional Tax Office, Tax Offices within the Directorate General of Taxes Special Jakarta Regional Tax Office and Medium Taxpayer Offices; and

 

 

 

2)

Taxpayers with the head office Taxpayer Identification Number status with certain criteria listed in Small Taxpayer Offices, namely Taxpayers with the largest tax revenue contribution or other criteria stipulated through a competent director’s official memorandum for the Taxpayer supervision policy, stipulated by the Head of the DGT Regional Office.

 

 

 

 

 

 

 

 

 

 

 

 

2.

General Provisions

 

 

a.

The Directorate General of Taxes (DGT) supervises:

 

 

 

1)

Taxpayers, that consist of:

 

 

 

 

a)

Strategic Taxpayers;

 

 

 

 

b)

Other Taxpayers.

 

 

 

2)

Taxable Objects, either those that have been or have not been subject to Land and Building Tax (PBB) liability.

 

 

b.

Supervision consists of core activities in the form of Periodic Payment Supervision and Material Compliance Supervision.

 

 

c.

The supervision business process referred to in letter a includes supervision of Income Tax (PPh), Value Added Tax (VAT), Sales Tax on Luxury Goods (STLGs), Land and Building Tax, Stamp Duty as well as Other Direct Taxes and Indirect Taxes that are administered by the DGT.

 

 

d.

Strategic Taxpayers are supervised through Formal Compliance Examination and Material Compliance Examination, either in the scope of Periodic Payment Supervision or Material Compliance Supervision.

 

 

e.

Other Taxpayers are supervised through regional-based Formal Compliance Examination and Material Compliance Examination, either in the scope of Periodic Payment Supervision or Material Compliance Supervision, except for Taxpayers referred to in number 1 letter ss number 1) letter a).

 

 

f.

Supervision is preceded by the formulation of supervision plans through the conference of DSP3 and the determination of DPP stipulated under the Director General of Taxes Circular Letter concerning the implementation of Compliance Risk Management and Business Intelligence.

 

 

g.

Strategic Taxpayers are supervised through the supervision business process stipulated under this Director General of Taxes Circular Letter.

 

 

h.

Other Taxpayers that already have Taxpayer Identification Numbers, new Taxpayers resulting from extensification and Taxable Objects that have been subject to Land and Building Tax liabilities are supervised through the supervision business process stipulated under this Director General of Taxes Circular Letter, the Director General of Taxes Circular Letter concerning field data collection and data quality assurance in the context of database expansion and the Director General of Taxes Circular Letter concerning procedures for the registration, reporting and data collection of Taxable Objects of Land and Building Tax.

 

 

i.

Other Taxpayers that do not yet have Taxpayer Identification Numbers are supervised through the extensification business process stipulated under the Director General of Taxes Circular Letter concerning procedures for extensification. In addition, for Taxpayers that have or do not yet have Taxpayer Identification Numbers, field data collection and data quality assurance are carried out pursuant to the Director General of Taxes Circular Letter concerning field data collection and data quality assurance in the context of database expansion.

 

 

j.

Taxable Objects that have not been subject to Land and Building Tax liabilities are supervised through the data collection business process stipulated under the Director General of Taxes Circular Letter concerning procedures for the registration, reporting and data collection of Taxable Objects of Land and Building Tax.

 

 

k.

Company Group is supervised through Material Compliance Examination with the following provisions:

 

 

 

1)

in the event that a Company Group is included as Strategic Taxpayers, Comprehensive Examination is carried out;

 

 

 

2)

in the event that a Company Group is included as Other Taxpayers, Thorough Examination is carried out;

 

 

 

simultaneously and in a coordinated manner.

 

 

l.

The supervision business process at the Tax Office level is carried out by Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team and their superior Head of Section in Section of Tax Supervisions I to VI as stated in the Minister of Finance Regulation concerning the organisation and work procedures of the vertical agencies of the DGT.

 

 

m.

Material Compliance Examination followed up with the Request for an Explanation of Data and/or Information is carried out by considering efficiency and effectiveness so as not to increase Taxpayers’ compliance cost and not to interfere with their businesses.

 

 

n.

In the implementation of Comprehensive Examination and Request for an Explanation of Data and/or Information of the Tax Year prior to the current Tax Year, a joint conference is held between Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team for Strategic Taxpayers and the Supervisor.

 

 

o.

Based on the Head of the DGT Regional Office’s considerations and if necessary, the Supervisor at the DGT Regional Office may be assigned to conduct joint conferences with Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team for Strategic Taxpayers in the Tax Office work units within the DGT Regional Office in charge, in the implementation of Comprehensive Examination and Request for an Explanation of Data and/or Information referred to in letter n.

 

 

p.

The implementation of the supervision business process is supported by the Supervision Information System, among others, the Web-Based Profile Application (Approweb).

 

 

q.

To ensure the effectiveness of the implementation of Supervision, the Head of the Tax Office is responsible for, among others:

 

 

 

1)

optimizing the role of the Tax Office Compliance Committee by coordinating and monitoring the implementation of Periodic Payment Supervision and Material Compliance Supervision, both for Strategic Taxpayers and Other Taxpayers as well as the follow-up;

 

 

 

2)

determining Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team for Taxpayers in the Section of Tax Supervision by prioritizing an adequate number of employees in the Section of Tax Supervision of Strategic Taxpayers while taking into account the workload and tax revenue targets; and

 

 

 

3)

in respect of regional control, in addition to ensuring that Supervision is carried out not only through Formal Compliance Examination of registered Taxpayers and Material Compliance Examination of Taxpayers included in DPP, it is also necessary to supervise Taxpayers that do not yet have Taxpayer Identification Numbers through extensification, field data collection to expand the database and supervision of Taxable Objects that have not been subject to Land and Building Tax liabilities.

 

 

r.

In implementing the supervision business process, DGT employees must equip themselves with interpersonal skills, analytical skills and understanding of statutory tax provisions.

 

 

s.

DGT employees are directed to upgrade and update their understanding of the supervision business process, interpersonal skills, analytical skills and understanding of statutory tax provisions independently and periodically by utilizing available knowledge management, including Tax Knowledge Base and Compatriot.

 

 

t.

The DGT Head Office, the DGT Regional Office and the Tax Office are requested to organise regular education and/or training for DGT employees, in the context of upgrading and updating their understanding of the supervision business process, interpersonal skills, analytical skills and understanding of statutory provisions.

 

 

u.

Data found in the business process of implementing Supervision in the form of Formal Compliance Examination, Material Compliance Examination and/or Request for an Explanation of Data and/or Information shall be followed up pursuant to the Director General of Taxes Circular Letter concerning guidelines for the implementation of the data management cycle.

 

 

v.

Data found in the business process of implementing Supervision in the form of Visits shall be followed up pursuant to the Director General of Taxes Circular Letter concerning field data collection and data quality assurance in the context of database expansion.

 

 

 

 

 

 

 

 

 

 

 

 

3.

Taxpayer Supervision Planning

 

 

a.

Preparing Supervision Plans

 

 

 

1)

Preparing Supervision Plans at the DGT Head Office

 

 

 

 

a)

Supervision Plans at the DGT Head Office for a year are outlined in:

 

 

 

 

 

(1)

Policies and Strategies for Safeguarding National Tax Revenues;

 

 

 

 

 

(2)

Policies and Strategies for National Supervision; and

 

 

 

 

 

(3)

Tax Data Analysis Focus.

 

 

 

 

b)

Policies and Strategies for Safeguarding National Tax Revenues contain potential tax revenue estimates per business sector, revenue estimates from each function in the DGT, tax revenue estimates for each DGT Regional Office, tax revenue estimates from Periodic Payment Supervision and Material Compliance Supervision, policies and the Director General of Taxes’ work programs and/or other relevant information.

 

 

 

 

c)

Policies and Strategies for National Supervision contains tax revenue estimates from the Supervision function, policies and work programs for the implementation of the Supervision function, monitoring and evaluation work programs for the implementation of the Supervision function at the national level and/or other relevant information.

 

 

 

 

d)

Tax Data Analysis Focus contains sectors that will be the focus of the implementation of Tax Data Analysis, including the industrial sector, trade and digital economy sector, service sector, natural resources sector, government expenditure sector and/or other sectors.

 

 

 

 

e)

Preparation of Policies and Strategies for Safeguarding National Tax Revenues for the following year is completed no later than 15 December of the current year.

 

 

 

 

f)

Preparation of Policies and Strategies for National Supervision for the following year is completed no later than 31 December of the current year.

 

 

 

 

g)

Preparation of Tax Data Analysis Focus for the following year is completed no later than 31 December of the current year.

 

 

 

 

h)

Policies and Strategies for Safeguarding National Tax Revenues, Policies and Strategies for National Supervision and Tax Data Analysis Focus are subject to a joint conference in the DGT Head Office Compliance Committee.

 

 

 

 

i)

Policies and Strategies for Safeguarding National Tax Revenues and Policies and Strategies for National Supervision may be updated based on the direction/disposition of the Director General of Taxes and/or the results of monitoring and evaluation of Supervision that have been approved by the Director General of Taxes.

 

 

 

 

j)

Tax Data Analysis Focus may be updated based on the direction/disposition of the Director of Tax Data and Information and/or the results of monitoring and evaluation of Supervision approved by the Director of Tax Data and Information.

 

 

 

 

k)

Policies and Strategies for Safeguarding National Tax Revenues are prepared and/or updated according to Procedures for Preparing/Updating Policies and Strategies for Safeguarding National Tax Revenues stated in Appendix A which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

l)

Policies and Strategies for National Supervision are prepared and/or updated according to Procedures for Preparing/Updating Policies and Strategies for National Supervision stated in Appendix B which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

m)

Tax Data Analysis Focus are prepared and/or updated according to Procedures for Preparing/Updating Tax Data Analysis Focus stated in Appendix C which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

2)

Preparing Supervision Plans at the DGT Regional Office

 

 

 

 

a)

Supervision Plans at the DGT Regional Office for a year are outlined in:

 

 

 

 

 

(1)

DGT Regional Office Strategies for Safeguarding Tax Revenues; and

 

 

 

 

 

(2)

DGT Regional Office Strategies for Supervision.

 

 

 

 

b)

DGT Regional Office Strategies for Safeguarding Tax Revenues contain, among others, potential tax revenues per business sector, tax revenue estimates from each function in the DGT Regional Office, tax revenue estimates for each Tax Office under the DGT Regional Office, tax revenue estimates from Periodic Payment Supervision and Material Compliance Supervision, the Head of the DGT Regional Office’s work programs and/or other relevant information.

 

 

 

 

c)

DGT Regional Office Strategies for Supervision contain, among others, tax revenue estimates from the Supervision function, work program for the implementation of the Supervision function, monitoring and evaluation work programs of tax revenue performance originating from the Supervision function at the DGT Regional Office level, sectors that will be the focus of the implementation of Tax Data Analysis at the DGT Regional Office and/or other relevant information.

 

 

 

 

d)

Preparation of DGT Regional Office Strategies for Safeguarding Tax Revenues and DGT Regional Office Strategies for Supervision for the current year is completed no later than 20 January of the current year.

 

 

 

 

e)

DGT Regional Office Strategies for Safeguarding Tax Revenues and DGT Regional Office Strategies for Supervision are subject to a joint conference in the DGT Regional Office Compliance Committee.

 

 

 

 

f)

DGT Regional Office Strategies for Safeguarding Tax Revenues and DGT Regional Office Strategies for Supervision may be updated based on the direction/disposition of the Head of the DGT Regional Office and/or the results of monitoring and evaluation of Supervision that have been approved by the Head of the DGT Regional Office.

 

 

 

 

g)

DGT Regional Office Strategies for Safeguarding Tax Revenues are prepared and/or updated according to Procedures for Preparing/Updating DGT Regional Office Strategies for Safeguarding Tax Revenues stated in Appendix D which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

h)

DGT Regional Office Strategies for Supervision are prepared and/or updated according to Procedures for Preparing/Updating DGT Regional Office Strategies for Supervision stated in Appendix E which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

3)

Preparing Supervision Plans at the Tax Office

 

 

 

 

a)

Supervision Plans at the Tax Office for a year are outlined in:

 

 

 

 

 

(1)

Tax Office Tax Revenue Safeguarding Plans; dan

 

 

 

 

 

(2)

Tax Office Supervision Plans.

 

 

 

 

b)

Tax Office Tax Revenue Safeguarding Plans contain potential tax revenue estimates per business sector/type of tax, tax revenue estimates for each function/section in the Tax Office, tax revenue estimates from Periodic Payment Supervision and Material Compliance Supervision, the Head of the Tax Office’s work programs and/or other relevant information.

 

 

 

 

c)

Potential tax revenue estimates per business sector/type of tax referred to in letter b) include potential tax revenues calculated on central/regional government expenditures using the potential calculation method referred to in the Director General of Taxes Regulation concerning the calculation of potential taxes on regional expenditures.

 

 

 

 

d)

Tax Office Supervision Plans contain work programs for the implementation of the Supervision function and monitoring and evaluation work programs of the performance of tax revenues originating from the Supervision function at the Tax Office level and/or other relevant information.

 

 

 

 

e)

Preparation of Tax Office Tax Revenue Safeguarding Plans and Tax Office Supervision Plans for the current year is completed no later than 31 January of the current year.

 

 

 

 

f)

Tax Office Tax Revenue Safeguarding Plans dan Tax Office Supervision Plans are subject to a joint conference in the Tax Office Compliance Committee.

 

 

 

 

g)

Tax Office Tax Revenue Safeguarding Plans and Tax Office Supervision Plans may be updated based on the direction/disposition of the Head of the Tax Office and/or the results of monitoring and evaluation of Supervision that have been approved by the Head of the Tax Office.

 

 

 

 

h)

Tax Office Tax Revenue Safeguarding Plans are prepared and/or updated according to Procedures for Preparing/Updating Tax Office Tax Revenue Safeguarding Plans stated in Appendix F which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

i)

Tax Office Supervision Plans are prepared and/or updated according to Procedures for Preparing/Updating Tax Office Supervision Plans stated in Appendix G which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

b.

Setting Supervision Priorities

 

 

 

1)

Setting Supervision Priorities at the DGT Head Office

 

 

 

 

a)

Preparing the DGT Head Office DSA

 

 

 

 

 

(1)

Supervision at the DGT Head Office is outlined in the DGT Head Office DSA based on Tax Data Analysis Focus.

 

 

 

 

 

(2)

Preparation of the DGT Head Office DSA for the current year is completed no later than 15 January of the current year.

 

 

 

 

 

(3)

Preparation of the DGT Head Office DSA is subject to a joint conference in the DGT Head Office Compliance Committee.

 

 

 

 

 

(4)

The DGT Head Office DSA may be updated based on the direction/disposition of the Director of Tax Data and Information and/or the results of monitoring and evaluation of Supervision that have been approved by the Director of Tax Data and Information.

 

 

 

 

 

(5)

The DGT Head Office DSA is prepared and/or updated according to Procedures for Preparing/Updating the DGT Head Office DSA stated in Appendix H which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(6)

The DGT Head Office DSA is prepared according to the sample form stated in Appendix I which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

b)

Directorate of Tax Potential, Compliance and Revenue, Directorate of Tax Extensification and Valuation and Directorate of Tax Data and Information receive DPP recapitulation, DSP3 Working Sheet recapitulation, DPP update recapitulation, DPP Update Working Sheet recapitulation prepared by the DGT Regional Office as well as Official Report of DSP3 Conference to Be Determined as List of Tax Data Analysis Targets and DPP and Official Report of DPP Update to be monitored.

 

 

 

2)

Setting Supervision Priorities at the DGT Regional Office

 

 

 

 

a)

Determination of Strategic Taxpayers

 

 

 

 

 

(1)

The Head of the DGT Regional Office may determine Strategic Taxpayers in Small Taxpayer Offices based on the proposed Strategic Taxpayers submitted by the Heads of Small Taxpayer Offices by issuing a Decree of the Determination of Strategic Taxpayers no later than 7 (seven) working days after the proposal is received and effective on January 2 of the current year.

 

 

 

 

 

(2)

In the event that during the evaluation, proposal and issuance of the Head of the DGT Regional Office Decree, the Taxpayers proposed and determined as Strategic Taxpayers transfer their place of registration to another Tax Office within the same scope of the DGT Regional Office or the scope of a different DGT Regional Office, no amendments are to be made to the Head of the DGT Regional Office Decree. These Taxpayers constitute Strategic Taxpayers of the Former Tax Office that transfer their place of registration to the New Tax Office with the Strategic Taxpayer status.

 

 

 

 

 

(3)

Decree of the determination of Strategic Taxpayers referred to in number (1) is valid for one year and may only be updated in the event of amendments to the Director General of Taxes Decree concerning Taxpayers registered at Tax Offices within the Directorate General of Taxes Large Taxpayers Regional Tax Office, Tax Offices within the Directorate General of Taxes Special Jakarta Regional Tax Office and Medium Taxpayer Offices.

 

 

 

 

 

(4)

The Head of the DGT Regional Office may evaluate and issue amendments to the Head of the DGT Regional Office Decree referred to in letter (3) with the following provisions:

 

 

 

 

 

 

(a)

Small Taxpayer Offices’ proposal in the context of re-evaluation shall be submitted to the DGT Regional Office no later than 5 (five) working days from the issuance of the Director General of Taxes Decree.

 

 

 

 

 

 

(b)

Head of the DGT Regional Office Decree is effective on the Start of Registration (SMT) in the Director General of Taxes Decree.

 

 

 

 

 

(5)

Strategic Taxpayers are determined by the Head of the DGT Regional Office according to Procedures for the Determination of Strategic Taxpayers referred to in Appendix J which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(6)

Decree of the Determination of Strategic Taxpayers is prepared using the sample format stated in Appendix K which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

b)

Preparation of the DGT Regional Office DSA

 

 

 

 

 

(1)

Supervision Priorities at the DGT Regional Office are outlined in the DGT Regional Office DSA based on the DGT Regional Office Strategies for Safeguarding Revenues and DGT Regional Office Strategies for Supervision.

 

 

 

 

 

(2)

Preparation of the DGT Regional Office DSA for the current year is completed no later than 31 January of the current year

 

 

 

 

 

(3)

Preparation of the DGT Regional Office DSA is subject to a joint conference in the DGT Regional Office Compliance Committee.

 

 

 

 

 

(4)

The DGT Regional Office DSA may be updated based on the direction/disposition of the Head of the DGT Regional Office and/or the results of monitoring and evaluation of Supervision that have been approved by the Head of the DGT Regional Office.

 

 

 

 

 

(5)

The DGT Regional Office DSA is prepared and/or updated according to Procedures for the Preparation of DGT Regional Office DSA stated in Appendix L which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(6)

The DGT Regional Office DSA is prepared according to the sample form stated in Appendix M which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

c)

DPP Recapitulation

 

 

 

 

 

(1)

Tax Potential Monitoring and Data Division and/or Tax Registration, Extensification and Valuation Division recapitulate DPP and DSP3 Working Sheet prepared by the Tax Office in their working area to be submitted to the Directorate of Tax Potential, Compliance and Revenue, Directorate of Tax Extensification and Valuation and Directorate of Tax Data and Information attached with the Official Report of DSP3 Conference to be determined as List of Tax Data Analysis Targets and DPP no later than 15 February of the current year.

 

 

 

 

 

(2)

Tax Potential Monitoring and Data Division and/or Tax Registration, Extensification and Valuation Division recapitulate DPP update and DPP Update Working Sheet prepared by the Tax Office in their working area to be submitted by the Directorate of Tax Potential, Compliance, and Revenue, Directorate of Tax Extensification and Valuation and Directorate of Tax Data and Information attached with the Official Report of DPP Update no later than the end of the following month after the end of the previous quarter.

 

 

 

 

 

(3)

In the event that in the proposed DPP, the following conditions are found:

 

 

 

 

 

 

(a)

Taxpayers will and/or are undergoing Material Compliance Examination at the DGT Regional Office according to DSA; or

 

 

 

 

 

 

(b)

there are Head of the DGT Regional Office’s considerations, Head of the DGT Regional Office may submit an official memorandum to the Head of the Tax Office proposing t\DPP and/or updating of DPP.

 

 

 

 

 

(4)

The official memorandum referred to in number (3) contains a follow-up to the DPP with the following provisions:

 

 

 

 

 

 

(a)

for the Taxpayers referred to in number (3) letter (a), Head of the DGT Regional Office requests the Head of the Tax Office to postpone Examination until LHA is issued with the conclusion that a non- compliance mode is found and the estimated potential tax obligations that have not been fulfilled and submitted to Tax Office through the Supervision Information System or notification of the cancellation of Material Compliance Examination of the Taxpayers by the Head of the DGT Regional Office.

 

 

 

 

 

 

(b)

The considerations referred to in number (3) letter (b), including the existence of Taxpayers having a risk of non-compliance but have not been included in the proposed DPP, the Head of the DGT Regional Office requests the Head of the Tax Office to include these Taxpayers in the DPP update for the next period.

 

 

 

 

 

(5)

DPP Recapitulation is prepared according to the sample form stated in Appendix N which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(6)

DPP Update Recapitulation is prepared according to the sample form stated in Appendix O which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(7)

DSP3 Working Sheet Recapitulation and DPP Update Working Sheet Recapitulation are prepared according to the sample form stated in Appendix P which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

3)

Setting Supervision Priorities at the Tax Office

 

 

 

 

a)

Proposed Strategic Taxpayers by Small Taxpayer Offices

 

 

 

 

 

(1)

Small Taxpayer Offices submit proposed Strategic Taxpayers to the DGT Regional Office in charge of them.

 

 

 

 

 

(2)

Proposed Strategic Taxpayers referred to in number (1) shall be submitted no later than 15 December, after conducting an evaluation prior to the current year of Strategic Taxpayers.

 

 

 

 

 

(3)

All Strategic Taxpayers are evaluated by the Section of Tax Supervision and Section of Data Quality Assurance by considering, among others, tax revenues, risk of non- compliance, potential tax revenues, compliance in the filing of Annual Income Tax Returns and history of supervision and/or audits.

 

 

 

 

 

(4)

Evaluation results referred to in number (3) are followed up with:

 

 

 

 

 

 

(a)

Proposed Strategic Taxpayers whose status is changed to Other Taxpayers; or

 

 

 

 

 

 

(b)

Proposed Strategic Taxpayers that remain Strategic Taxpayers.

 

 

 

 

 

(5)

Small Taxpayer Offices may propose additional Strategic Taxpayers, namely Other Taxpayers whose status is changed to Strategic Taxpayers, taking into account the follow-up to the evaluation results referred to in number (4).

 

 

 

 

 

(6)

Strategic Taxpayers that may be proposed for a status change to Other Taxpayers referred to in number (4) letter (a) include:

 

 

 

 

 

 

(a)

Strategic Taxpayers of the Former Tax Office which on 1 December have transferred their place of registration

 

 

 

 

 

 

(b)

Taxpayers with certain criteria, namely:

 

 

 

 

 

 

 

i.

Taxpayers experiencing a decline in business with the following provisions:

 

 

 

 

 

 

 

 

i)

experiencing a decline in business of at least 50% of business turnover for two consecutive years;

 

 

 

 

 

 

 

 

ii)

subject to Comprehensive Examination for the last two Tax Years; and

 

 

 

 

 

 

 

 

iii)

are not being/have been audited for all taxes, 

 

 

 

 

 

 

 

 

or

 

 

 

 

 

 

 

ii.

the Taxpayers no longer fulfil subjective and objective requirements as Taxpayers.

 

 

 

 

 

(7)

Other Taxpayers that may be proposed for a status change to Strategic Taxpayers referred to in number (5) are Taxpayers with the head office Taxpayer Identification Numbers status included in the criteria of Strategic Taxpayers.

 

 

 

 

 

(8)

The criteria referred to in number (7) and the number of Strategic Taxpayers are regulated by an official memorandum of the competent director of the Taxpayer supervision policies.

 

 

 

 

 

(9)

Strategic Taxpayers for the year following the current year are proposed according to Procedures for Proposing List of Strategic Taxpayers referred to in Appendix Q which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

b)

Assignment of Strategic Taxpayers

 

 

 

 

 

(1)

Based on the Decree of the Determination of Strategic Taxpayers by the Head of the DGT Regional Office referred to in number 2) letter a) number (1), the Head of the Tax Office issues an official memorandum concerning the Assignment of Strategic Taxpayers in the Section of Tax Supervision conducting the Supervision of Strategic Taxpayers.

 

 

 

 

 

(2)

In the event that Strategic Taxpayers with the head office Taxpayer Identification Number status have branches that are administered at the same Tax Office, Taxpayers with the branch Taxpayer Identification Number status must be assigned to Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Strategic Taxpayers with the said head office Taxpayer Identification Number status.

 

 

 

 

 

(3)

At Small Taxpayer Offices, Taxpayer Assignment in the information system of the Directorate General of Taxes is carried out no later than 7 (seven) working days from the date of the Decree of the Determination of Strategic Taxpayers by the Head of the Section of Data Quality Assurance.

 

 

 

 

 

(4)

In the event that Strategic Taxpayers’ places of registration are transferred to other Tax Offices, Supervision is transferred to the New Tax Office with the following provisions:

 

 

 

 

 

 

(a)

The Former Tax Office must submit written notification to the New Tax Office covering:

 

 

 

 

 

 

 

i.

the status of Taxpayers being transferred as Strategic Taxpayers;

 

 

 

 

 

 

 

ii.

Supervision that has been implemented;

 

 

 

 

 

 

 

iii.

the follow-up to the Supervision that has been carried out; and

 

 

 

 

 

 

 

iv.

a Copy of the Head of the DGT Regional Office Decree concerning the determination of Strategic Taxpayers at the Former Tax Office.

 

 

 

 

 

 

(b)

Taxpayers transferred to the New Tax Office must be administered through an assignment to the Section of Tax Supervision supervising Strategic Taxpayers.

 

 

 

 

c)

Assignment of Other Taxpayers

 

 

 

 

 

Assignment stages of Other Taxpayers are carried out on a regional basis with the following provisions:

 

 

 

 

 

(1)

Regional Assignment is carried out with the following provisions:

 

 

 

 

 

 

(a)

Head of the Small Taxpayer Office divides the work areas for the Section of Tax Supervision that conducts Supervision of Other Taxpayers.

 

 

 

 

 

 

(b)

Head of Small Taxpayer Office divides the work areas for Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team for Other Taxpayers.

 

 

 

 

 

 

(c)

The boundaries of the supervisory zone at least follow the boundaries of the government administration area, such as the municipal/regency area, sub- district area or urban precinct/village area.

 

 

 

 

 

 

(d)

In the event that the supervisory zone is part of an urban precinct /village area, the division of the supervisory zone shall at least follow natural boundaries and/or permanent/fixed man-made boundaries, such as roads and rivers.

 

 

 

 

 

 

(e)

One supervisory zone is at least one complete polygon, in the event that more than one polygon may be required.

 

 

 

 

 

 

(f)

The division of the sectional supervisory zone and the supervisory zone of Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Other Taxpayers to the highest extent does not change the division of the specified supervisory zone.

 

 

 

 

 

 

(g)

The work areas of Small Taxpayer Offices must be completely divided into supervisory zones which are the responsibility of each Tax Office employee who has the duties and functions of Supervision/Tax Supervision Team of Other Taxpayers.

 

 

 

 

 

 

(h)

Head of the Tax Office may determine the priority supervisory zone supervised by the Section of Tax Supervision.

 

 

 

 

 

 

(i)

The division of supervisory zones is not solely aimed at equitable distribution of revenues, thereby, an area, especially one with high economic potential, should not be divided for the purpose of equitable distribution of revenues.

 

 

 

 

 

 

(j)

Technical procedures and application support in respect of regional assignments will be further regulated with an official memorandum of the competent director for extensification and valuation policies and/or Taxpayer supervision.

 

 

 

 

 

(2)

Taxpayer Assignment is carried out with the following provisions:

 

 

 

 

 

 

(a)

Taxpayers that already have Taxpayer Identification Numbers must carry out Taxpayer Assignment to each Tax Office employee who has the duties and functions of Supervision/Tax Supervision Team for Other Taxpayers according to their supervisory zone.

 

 

 

 

 

 

(b)

Taxpayer Assignment referred to in letter (a) is carried out in the following steps:

 

 

 

 

 

 

 

i.

for Taxpayers recorded in geotagging data, Taxpayer Assignment is carried out based on the nominative Point of Interest (POI) list according to the supervisory zone of Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of other Taxpayers;

 

 

 

 

 

 

 

ii.

for Taxpayers that have not been recorded in the geotagging data, Taxpayer Assignment is carried out based on the address identified on the Taxpayers Master File (MFWP) according to the supervisory zone of Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Other Taxpayers;

 

 

 

 

 

 

 

iii.

for Taxpayers on whom the Taxpayer Assignment based on the provisions referred to in point I and/or point ii cannot yet be carried out, Assignment of Taxpayers continues to be carried out based on the Head of Small Taxpayer Office’s considerations, new tagging and/or updating of addresses will subsequently be carried out on the MFWP according to actual conditions.

 

 

 

 

 

 

(c)

For Government Agency Taxpayers, Joint Operation Taxpayers, Customs Service Company Taxpayers and Branch Taxpayers Without Head Offices referred to in number 1 letter ss number 1) letter a) and other than Strategic Taxpayers with large tax revenue contributions may be assigned to certain Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Other Taxpayers based on the Head of the Tax Office’s considerations.

 

 

 

 

 

 

(d)

Technical procedures and application support in respect of Taxpayer Assignment will be determined further with an official memorandum of the competent director for extensification and valuation policies and/or Taxpayer supervision.

 

 

 

 

d)

Preparation of DPP

 

 

 

 

 

(1)

Supervision Priorities at the Tax Office are outlined in DPP based on Policies and Strategies for National Supervision, DGT Regional Office Strategies for Supervision and Tax Office Supervision Plans.

 

 

 

 

 

(2)

Preparation of DPP for the current year is completed no later than 7 February of the current year by the Tax Office Compliance Committee

 

 

 

 

 

(3)

In the context of preparing DPP, the Tax Office Compliance Committee determines Taxpayers included in DPP of Strategic Taxpayers and Other Taxpayers using CRM, specifically Taxpayers based on the Audit Function and Supervision Function CRM Compliance Risk Map that have a high risk of non-compliance (quadrant X3Y3, X3Y2 and X2Y3) and LHA resulting from Material Compliance Examination at the DGT Head Office and the DGT Regional Office.

 

 

 

 

 

(4)

Tax Office Compliance Committee in preparing the DPP takes into account other variables, including:

 

 

 

 

 

 

(a)

the DGT Head Office DSA and the DGT Regional Office DSA ;

 

 

 

 

 

 

(b)

trigger data;

 

 

 

 

 

 

(c)

High Wealth Individual (HWI) Taxpayers and Company Group Taxpayers;

 

 

 

 

 

 

(d)

Taxpayers that have the risk of tax avoidance through Transfer Pricing transactions;

 

 

 

 

 

 

(e)

List of Joint Analysis Targets (DSAB) among the DGT, Directorate General of Customs and Excise (DGCE) and Directorate General of Budget (DJA) and Joint Supervision Target List (DSPB) among the DGT, Directorate General of Fiscal Balance (DJPK) and Local Government (Pemda);

 

 

 

 

 

 

(f)

Ability to Pay;

 

 

 

 

 

 

(g)

List of Taxpayers that Are Currently or Have Been Subject to Audits, Preliminary Audits and/or Investigations;

 

 

 

 

 

 

(h)

List of Taxpayers participating in the Voluntary Disclosure Program;

 

 

 

 

 

 

(i)

Taxpayers that have repeated indications of non-compliance based on the results of valuations, audits, objections, appeals, lawsuits and civil reviews; and/or

 

 

 

 

 

 

(j)

Taxpayers with data of estimated potential taxes that have not been fulfilled, including data on Field Data Collection results, Tax Return analysis, Financial Statement Analysis, Transfer Pricing Analysis, Business Process Analysis, including data nearing the expiration of tax assessments and other potential data.

 

 

 

 

 

(5)

In the process of preparing DPP, the Tax Office Compliance Committee also takes into account the following regional parameters:

 

 

 

 

 

 

(a)

New taxpayers resulting from extensification.

 

 

 

 

 

 

(b)

Regional statistical data on the supervisory zone, including:

 

 

 

 

 

 

 

i.

total population;

 

 

 

 

 

 

 

ii.

number of individual and corporate Taxpayers that already have Taxpayer Identification Numbers;

 

 

 

 

 

 

 

iii.

total tax revenues and growth;

 

 

 

 

 

 

 

iv.

description of the regional economy and dominant business sectors; and

 

 

 

 

 

 

 

v.

tax analysis,

 

 

 

 

 

 

 

to identify potential taxes within the supervisory zone of Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Other Taxpayers.

 

 

 

 

 

 

(c)

Results of field data collection carried out through processing and enrichment with data already held and/or obtained by the DGT pursuant to the Director General of Taxes Circular Letter concerning the guidelines for implementing the data management cycle.

 

 

 

 

 

 

(d)

Results of processing and enrichment referred to in letter (c) are in the form of:

 

 

 

 

 

 

 

i.

data related to Taxpayers that already have Taxpayer Identification Numbers; and

 

 

 

 

 

 

 

ii.

data related to Taxpayers that do not yet have Taxpayer Identification Numbers.

 

 

 

 

 

(6)

Determination of Taxpayers in the DPP also takes into account the total tax revenue estimates in the Tax Revenue Safeguard Plans at the Tax Office to fulfil the tax revenue targets from Material Compliance Supervision managed by the Section of Tax Supervision at the Tax Office.

 

 

 

 

 

(7)

In the process of preparing DPP, the Tax Office Compliance Committee prepares the DSP3 Working Sheet and Official Report of DSP3 Conference to be determined as List of Tax Data Analysis Targets and DPP.

 

 

 

 

 

(8)

In determining the total potential estimates in the DSP3 Working Sheet, the Tax Office takes into account values, including:

 

 

 

 

 

 

(a)

LHA potentials;

 

 

 

 

 

 

(b)

trigger data;

 

 

 

 

 

 

(c)

other data, such as Field Data Collection; and

 

 

 

 

 

 

(d)

independent analysis potentials, including through Tax Return analysis, financial statement analysis, Transfer Pricing analysis, business process analysis,

 

 

 

 

 

 

by taking into account the comparison between the initial potential value based on the analysis with the trigger data value followed up by the Tax Office employees who have the duties and functions of the Tax Supervision/Supervision Team or Tax Potential Ratio (TPR) and the comparison between the realised value and the initial potential value or Success Rate (SR).

 

 

 

 

 

(9)

DPP may be updated based on the conference of the Tax Office Compliance Committee with the following provisions:

 

 

 

 

 

 

(a)

DPP is updated every quarter for supervisory activities in quarters II, III and IV, no later than the 20th of the following month after the end of the previous quarter.

 

 

 

 

 

 

(b)

Considering the quarterly trajectory targets and the realised value of tax revenues from Material Compliance Supervision managed by the Section of Tax Supervision.

 

 

 

 

 

 

(c)

DPP is updated by adding Taxpayers and/or Taxable Periods/Tax Years.

 

 

 

 

 

 

(d)

In determining the total potential estimates in DPP Update Working Sheet, the Tax Office recalculates the value of LHA potentials, trigger data, other data such as Field Data Collection and independent analysis based on the Examination results by Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team in the context of the issuance of the SP2DK while taking into account TPR and SR.

 

 

 

 

 

(10)

DPP Update referred to in number (9) is outlined in DPP Update Working Sheet and Official Report of DPP Update.

 

 

 

 

 

(11)

Head of the Tax Office submits DPP to the Head of the DGT Regional Office in charge in the form of:

 

 

 

 

 

 

(a)

DPP attached with Official Report of DSP3 Conference to be Determined as the List of Tax Data Analysis Targets and DPP and DSP3 Working Sheet no later than 7 February of the current year;

 

 

 

 

 

 

(b)

DPP update attached with the Official Report of DPP Update and DPP Update Working no later than the 20th of the following month after the end of the previous quarter.

 

 

 

 

 

(12)

In the event that the Head of the DGT Regional Office submits an official memorandum to the Head of the Tax Office for the follow-up to the submitted DPP and/or DPP update referred to in number 2) letter c) number (4), this shall be followed up with the following provisions:

 

 

 

 

 

 

(a)

Material Compliance Examination of the Taxpayers is postponed until the receipt of an official memorandum notifying the cancellation of the Material Compliance Examination at the DGT Regional Office or LHA from the DGT Regional Office with the following follow-up:

 

 

 

 

 

 

 

i.

In the event that the LHA is received with the conclusion that a non-compliance mode is found and estimated potential tax obligations have not been fulfilled, the Material Compliance Examination of the Taxpayers is continued based on the submitted LHA.

 

 

 

 

 

 

 

ii.

In the event that the LHA is received with the conclusion that an indication of a tax crime is found, it is followed up with the preparation of LHPt with the conclusion that the Taxpayers are subject to a preliminary audit.

 

 

 

 

 

 

(b)

In the event that consideration is given to the existence of Taxpayers that have a risk of non-compliance but have not been included in the proposed DPP, the Head of the Tax Office may propose that these Taxpayers be included in DPP update for the next period.

 

 

 

 

 

(13)

DPP shall be recorded on the Supervision Information System, in the event that the information system is able to accommodate the recording mechanism.

 

 

 

 

 

(14)

In the event that there are HWI and/or Company Group Taxpayers constituting the DGT’s supervision priorities, the Tax Office Compliance Committee must determine the said Taxpayers as DPP.

 

 

 

 

 

(15)

DPP is prepared according to the Procedures for Preparing the Tax Office DPP stated in Appendix R which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(16)

DPP is updated according to the Procedures for Updating the Tax Office DPP stated in Appendix S which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(17)

DPP and/or DPP Update are prepared according to the sample form stated in Appendix T which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(18)

DSP3 Working Sheet and DPP Update Working Sheet are prepared according to the sample form stated in Appendix U which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(19)

Official Report of DSP3 Conference to be determined as the List of Tax Data Analysis Targets and DPP are prepared according to the sample form stated in Appendix V which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(20)

Official Report of DPP Update are prepared according to the sample form stated in Appendix W which constitutes an integral part of this Director General of Taxes Circular Letter.

 

4.

The Implementation of Taxpayer Supervision

 

 

a.

Formal Compliance Examination

 

 

 

1)

Formal Compliance Examination is carried out by Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of all Taxpayers administered at the relevant Tax Offices, including Strategic Taxpayers and/or Other Taxpayers.

 

 

 

2)

Formal Compliance Examination is carried out when a tax obligation/formal provision should be, is being or has been fulfilled by Taxpayers.

 

 

 

3)

Formal Compliance Examination consists of Validation and Analysis of data and/or information on the fulfillment of formal obligations/conditions, whether those that will be, currently or have already been fulfilled by Taxpayers, pursuant to statutory tax provisions, which among others, relate to:

 

 

 

 

a)

timeliness to be registered as Taxable Persons;

 

 

 

 

b)

timeliness of tax payment/remittance;

 

 

 

 

c)

timeliness and/or completeness of Tax Reports, which includes:

 

 

 

 

 

(1)

Periodic Tax Returns and Annual Income Tax Returns;

 

 

 

 

 

(2)

Notice of Taxable Objects; and

 

 

 

 

 

(3)

other reports;

 

 

 

 

d)

tax installments in the current year which must be self-paid by Taxpayers;

 

 

 

 

e)

tax services and/or facilities received and/or held by Taxpayers; and

 

 

 

 

f)

other tax obligations/formal provisions.

 

 

 

4)

In addition based on the data and/or information held, Examination of the fulfillment of formal obligations related to tax services and/or facilities received and/or held by Taxpayers referred to in number 3) letter e) may be carried out through Visits.

 

 

 

5)

Formal Compliance Examination results referred to in number 3) are outlined in the Nominative List (Dafnom), which consists of:

 

 

 

 

a)

Nominative List of Taxpayers to Whom Exhortation Letters Are Issued, contains the list of Taxpayers to whom Exhortation Letters are proposed to be issued, among others in the form of:

 

 

 

 

 

(1)

Exhortation Letter to report their business to be registered as Taxable Persons, for Taxpayers, that among others, fulfil the following conditions/criteria:

 

 

 

 

 

 

(a)

Taxpayers that up to one month in an accounting year are projected to have gross turnover and/or gross revenues exceeding IDR4,800,000,000.00 (four billion and eight hundred million rupiah); and/or

 

 

 

 

 

 

(b)

Taxpayers that up to one month in an accounting year have had a gross turnover and/or gross revenues exceeding IDR4,800,000,000.00 (four billion and eight hundred million rupiah), have not fulfilled the obligation to report their business to be registered as Taxable Persons and have not passed the period stated in the Minister of Finance Regulation concerning the threshold for small-scale Value Added Tax entrepreneurs;

 

 

 

 

 

(2)

Exhortation Letter to fulfill the tax installment obligation in the current year which must be self-paid by the Taxpayers, for Taxpayers that, among others, fulfil the following conditions/criteria:

 

 

 

 

 

 

(a)

the Taxpayers have not paid tax installments in the current year up to the payment due date stated in statutory tax provisions;

 

 

 

 

 

 

(b)

the Taxpayers have tax installment underpayment in the current year because the value of the tax installments that have been paid is lower than the value of the tax installments that should otherwise be paid according to the Tax Returns that have been filed by the Taxpayers;

 

 

 

 

 

 

(c)

the Taxpayers have tax installment underpayment in the current year due to certain matters as follows:

 

 

 

 

 

 

 

i.

Annual Income Tax Return of the Tax Year prior to the current Tax Year is filed after the specified deadline has passed;

 

 

 

 

 

 

 

ii.

the Taxpayers are given an extension of the filing period of the Annual Income Tax Return;

 

 

 

 

 

 

 

iii.

the Taxpayers self-amend the Annual Income Tax Return resulting in tax installments in the current year being greater than the tax installments before the amendment,

 

 

 

 

 

 

 

stipulated under the provisions on the calculation of the amount of tax installments in the current Tax Year in certain cases;

 

 

 

 

 

 

(d)

the Taxpayers experience changes in business conditions or activities, including:

 

 

 

 

 

 

 

i.

increase in business turnover;

 

 

 

 

 

 

 

ii.

positive growth of the Taxpayers’ business sector in the current Tax Year,

 

 

 

 

 

 

 

and Income Tax payable for the current Tax Year is projected to increase compared to the previous Tax Year, thereby, it is necessary to increase the tax installments in the current year for the remaining Taxable Period of the Tax Year stipulated under the provisions on the calculation of the amount of tax installments in the current Tax Year in certain cases.

 

 

 

 

 

(3)

Exhortation Letter to amend Tax Reports, for Taxpayers that, among others, fulfil the following conditions/criteria:

 

 

 

 

 

 

(a)

the Taxpayers have submitted the Tax Report and have been given proof of receipt of the report, but misspellings and/or incomplete filling is later discovered/found;

 

 

 

 

 

 

(b)

the Taxpayers have submitted the Tax Report and have been given proof of receipt of the report but it is later discovered/found that the report has not been fully completed/attached with the required information and/or documents;

 

 

 

 

 

(4)

other Exhortation Letters to fulfil other tax obligations/formal provisions.

 

 

 

 

b)

Nominative List of Taxpayers Proposed for Audits for Other Purposes in the context of registration of Taxable Persons, contains a list of Taxpayers that up to one month in an accounting year have business turnover/gross revenues exceeding IDR4,800,000,000.00 (four billion eight and hundred million rupiah), but the Taxpayers do not fulfill the obligation to report their business to be registered as Taxable Persons within the period stated in the Minister of Finance Regulation concerning the threshold for small-scale Value Added Tax entrepreneurs.

 

 

 

 

c)

Nominative List of Taxpayers to Whom Notices of Tax Collection (STP) Are Issued, contains a list of Taxpayers proposed for the issuance of Notices of Tax Collection, namely Taxpayers that fulfil the following conditions/criteria:

 

 

 

 

 

(1)

do not or underpay Income Tax in the current year, as referred to in Article 14 paragraph (1) subparagraph a of the General Provisions and Tax Procedures Law;

 

 

 

 

 

(2)

have a tax underpayment as a result of misspellings and/or miscalculations, as referred to in Article 14 paragraph (1) subparagraph b of the General Provisions and Tax Procedures Law; and/or

 

 

 

 

 

(3)

are subject to administrative penalties referred to in Article 14 paragraph (1) subparagraph c of the General Provisions and Tax Procedures Law in the form of:

 

 

 

 

 

 

(a)

fines, including those referred to in Article 7, Article 14 paragraph (4), Article 25 paragraph (9) and Article 27 paragraph (5d) of the General Provisions and Tax Procedures Law;

 

 

 

 

 

 

(b)

interest, including that referred to in Article 8 paragraph (2), Article 8 paragraph (2a), Article 9 paragraph (2a), Article 9 paragraph (2b), Article 14 paragraph (3), Article 14 paragraph ( 5), Article 19 paragraph (2) and Article 19 paragraph (3) of the General Provisions and Tax Procedures Law; and/or

 

 

 

 

 

 

(c)

other administrative penalties in the field of taxation, the imposition of which is the duty of Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team.

 

 

 

 

d)

Nominative List of Taxpayers to Whom Reprimand Letters Are Issued, contains a list of Taxpayers that have not submitted Tax Reports according to the period stated in statutory tax provisions.

 

 

 

 

e)

Nominative List of Taxpayers Subject to Proposed Ex Officio Changes in the Administration of Tax Services and/or Facilities for Taxpayers, contains a list of Taxpayers whose received and/or held tax services and/or facilities will be subject to revocation, cancellation, review or other actions according to statutory tax provisions; and

 

 

 

 

f)

other Nominative Lists.

 

 

 

6)

Nominative List referred to in number 5) is followed up with the following provisions:

 

 

 

 

a)

Taxpayers in the Nominative List referred to in number 5) letter a) are followed up with the issuance of an Exhortation Letter;

 

 

 

 

b)

Taxpayers in the Nominative List referred to in number 5) letter b) are followed up with a proposed audit;

 

 

 

 

c)

Taxpayers in the Nominative List referred to in number 5) letter c) are followed up with the issuance of Notice of Tax Collection;

 

 

 

 

d)

Taxpayers in the Nominative List referred to in number 5) letter d) are followed up with the issuance of a Reprimand Letter;

 

 

 

 

e)

Taxpayers in the Nominative List referred to in number 5) letter e) are followed up by proposed ex officio changes in the administration of tax services and/or facilities for Taxpayers; and

 

 

 

 

f)     

Taxpayers in the Nominative List referred to in number 5) letter f) are followed up according to statutory tax provisions.

 

 

 

7)

In the event that data/information is known or obtained indicating the existence of Taxpayers’ future tax obligations, among others, as a result of:

 

 

 

 

a) 

non-routine business/economic transactions, including a merger, consolidation, acquisition, divestment, transfer of shares; and/or

 

 

 

 

b) 

changes in statutory provisions,

 

 

 

 

Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team may provide guidance by issuing an Exhortation Letter or making Visits to notify the Taxpayers’ future tax obligations.

 

 

 

8) 

Formal Compliance Examination is carried out according to the Procedures for the Implementation of Formal Compliance Examination stated in Appendix X which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

9) 

Nominative List of Taxpayers to Whom Exhortation Letters Are Issued referred to in number 5) letter a) is prepared according to the sample form stated in Appendix Y which is an integral part of this Director General of Taxes Circular Letter.

 

 

 

10) 

Nominative List of Taxpayers Proposed for Audits for Other Purposes referred to in number 5) letter b) is prepared according to the sample form stated in Appendix Z which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

11) 

Nominative List Taxpayers to Whom Notices of Tax Collection Are Issued referred to in number 5) letter c) is prepared according to the sample form stated in Appendix AA which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

12) 

Nominative List Taxpayers to Whom Reprimand Letters Are Issued referred to in number 5) letter d) is prepared according to the sample form stated in Appendix BB which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

13) 

Nominative List of Taxpayers Subject to Proposed Ex Officio Changes in the Administration of Tax Services and/or Facilities for Taxpayers referred to in number 5) letter e) is prepared according to the sample form stated in Appendix CC which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

b.

Material Compliance Examination

 

 

 

1)

Material Compliance Examination at the DGT Head Office

 

 

 

 

a)

Tax Data Analysis

 

 

 

 

 

(1)

Material Compliance Examination at the DGT Head Office in the form of Tax Data Analysis is carried out by the Directorate of Tax Data and Information on Taxpayers in the DGT Head Office DSA.

 

 

 

 

 

(2) 

If necessary to support the implementation of the Tax Data Analysis referred to in number (1), the following may be carried out:

 

 

 

 

 

 

(a) 

proposed valuation for tax purposes; and/or

 

 

 

 

 

 

(b) 

conferences with the DGT’s internal parties deemed relevant.

 

 

 

 

 

(3)

 Implementation and results of Tax Data Analysis are outlined in Analysis Working Sheet and LHA.

 

 

 

 

 

(4) 

In the event that a non-compliance mode and estimated potential tax obligations that have not been fulfilled are found but no indication of a tax crime is found, the Analysis Working Sheet and LHA referred to in number (3) are followed up with submission to the Tax Office through the Supervision Information System.

 

 

 

 

 

(5) 

In the event that a non-compliance mode, potential tax obligations that have not been fulfilled and indications of a tax crime are found, the Analysis Working Sheet and LHA referred to in number (3) may be followed up by proposing a preliminary audit.

 

 

 

 

 

(6) 

Indications of a tax crime refer to indications of tax crimes referred to in statutory tax provisions on procedures for preliminary audits of tax crimes, including those that do not remit taxes that have been withheld and/or collected and the issuer and/or users of Tax Invoices are not based on actual transactions.

 

 

 

 

 

(7) 

Directorate of Tax Data and Information may provide assistance in the implementation of Tax Data Analysis to Regional Offices within the DGT, based on a request for assistance in the implementation of Tax Data Analysis submitted by the DGT Regional Office concerned.

 

 

 

 

 

(8) 

Tax Data Analysis referred to in number (1) is carried out according to Procedures for the Implementation of Tax Data Analysis in the DGT Head Office stated in Appendix DD which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(9) 

Analysis Working Sheet and LHA referred to in figure (3) are prepared according to the sample form stated in Appendix EE which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

b)

Intelligence Analysis in the Context of Exploring Potentials

 

 

 

 

 

(1) 

Material Compliance Examination at the DGT Head Office in the form of intelligence analysis in the context of exploring potentials is carried out by the Directorate of Tax Intelligence pursuant to the Director General of Taxes Circular Letter concerning procedures for the implementation of tax intelligence and observations.

 

 

 

 

 

(2) 

Intelligence analysis results in the context of extracting potentials are in the form of:

 

 

 

 

 

 

(a) 

LIP that does not contain indications of a tax crime shall be submitted to the Tax Office through the Intelligence Information System, in the event that the information system is able to accommodate the submission mechanism; and/or

 

 

 

 

 

 

(b) 

LIP/LHA that do not contain indications of a tax crime shall be submitted to the Directorate of Tax Data and Information as additional analytical information, followed up by the submission of the LHA to Tax Offices within the DGT by the Directorate of Tax Data and Information through the Supervision Information System.

 

 

 

2) 

Material Compliance Examination at the DGT Regional Office

 

 

 

 

a)

Tax Data Analysis

 

 

 

 

 

(1) 

Material Compliance Examination at the DGT Regional Office in the form of Tax Data Analysis is carried out by the Tax Potential Monitoring and Data Division and the Tax Registration, Extensification and Valuation Division of Taxpayers in the the DGT Regional Office DSA.

 

 

 

 

 

(2) 

If necessary to support the implementation of the Tax Data Analysis referred to in number (1), the following may be carried out:

 

 

 

 

 

 

(a) 

proposed valuation for tax purposes;

 

 

 

 

 

 

(b) 

conferences with the DGT’s internal parties deemed relevant; and/or

 

 

 

 

 

 

(c) 

request for assistance in the implementation of Tax Data Analysis to the Directorate of Tax Data and Information.

 

 

 

 

 

(3) 

Implementation and results of Tax Data Analysis are outlined in the Analysis Working Sheet and LHA.

 

 

 

 

 

(4) 

In the event that a non-compliance mode and the estimated potential tax obligations that have not been fulfilled are found but no indication of a tax crime is found, the Analysis Working Sheet and LHA referred to in number (3) are followed up with submission to the Tax Office through the Supervision Information System.

 

 

 

 

 

(5) 

In the event that a non-compliance mode, the estimated potential tax obligations that have not been fulfilled and indications of a tax crime are found, the Analysis Working Sheet and LHA referred to in number (3) may be followed up by proposing a preliminary audit.

 

 

 

 

 

(6)

Indications of a tax crime refer to indications of tax crimes referred to in statutory tax provisions on procedures for preliminary audits of tax crimes, including those that do not remit taxes that have been withheld and/or collected and the issuer and/or users of Tax Invoices are not based on actual transactions.

 

 

 

 

 

(7) 

Requests for assistance in the implementation of Tax Data Analysis to the Directorate of Tax Data and Information referred to in number (2) letter (c) are carried out according to Procedures for Requesting Assistance in Tax Data Analysis at the DGT Regional Office stated in Appendix FF which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(8)

Tax Data Analysis referred to in number (1) is carried out according to Procedures for the Implementation of Tax Data Analysis at the DGT Regional Office stated in Appendix GG which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(9) 

Analysis Working Sheet and LHA referred to in figure (3) are prepared according to the sample form stated in Appendix EE which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

b) 

Intelligence Analysis in the Context of Exploring Potentials

 

 

 

 

 

(1) 

Material Compliance Examination at the DGT Regional Office in the form of intelligence analysis in the context of exploring potentials is carried out pursuant to the Director General of Taxes Circular Letter concerning procedures for the implementation of tax intelligence and observations.

 

 

 

 

 

(2) 

Results of intelligence analysis in the context of exploring potentials in the form of:

 

 

 

 

 

 

(a) 

LIP that does not contain indications of a tax crime is submitted to the Tax Office within the DGT Regional Office through the Intelligence Information System, in the event that the information system is able to accommodate the submission mechanism; and/or

 

 

 

 

 

 

(b) 

LHA that does not contain indications of tax crime is submitted to the Tax Office within the DGT Regional Office through the Supervision Information System.

 

 

 

3) 

Material Compliance Examination at Tax Offices

 

 

 

 

a) 

Material Compliance Examination in General

 

 

 

 

 

(1) 

Material Compliance Examination at the Tax Office is carried out by Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team for Taxpayers in the DPP.

 

 

 

 

 

(2) 

Material Compliance Examination consists of Validation and Analysis of Data and/or Information to determine the conclusions and follow-up.

 

 

 

 

 

(3) 

Data and/or Information referred to in number (2), include:

 

 

 

 

 

 

(a) 

trigger data and/or test data;

 

 

 

 

 

 

(b) 

LHA and/or LIP, which contain follow-up in the form of Supervision;

 

 

 

 

 

 

(c) 

financial statements, information tools and data resulting from Field Data Collection;

 

 

 

 

 

 

(d) 

results of valuation, audits, objections, appeals, lawsuits and civil reviews;

 

 

 

 

 

 

(e)

other Data and/or Information, including Data and/or Information from Agencies, Institutions, Associations or Other Parties data and Exchange of Information (Eol); and

 

 

 

 

 

 

(f) 

data on the amount of certain gross turnover used as the tax base and the period of final Income Tax imposition based on the Government Regulation concerning Income Tax on business income received or accrued by Taxpayers with a certain gross turnover.

 

 

 

 

 

(4) 

In the event that there are Data and/or Information related to Taxpayers not contained in the DPP and received after the DPP is prepared and needs to be followed up immediately, the Tax Office first updates the DPP before following up with Material Compliance Examination.

 

 

 

 

 

(5) 

If necessary to support the implementation of Material Compliance Examination at the Tax Office referred to in number (1), the following may be carried out:

 

 

 

 

 

 

(a) 

proposing valuation for tax purposes;

 

 

 

 

 

 

(b) 

conferences with the DGT’s internal parties deemed relevant; and/or

 

 

 

 

 

 

(c) 

Visits.

 

 

 

 

 

(6) 

Based on the implementation of Material Compliance Examination, conclusions can be drawn in the form of:

 

 

 

 

 

 

(a) 

Taxpayers are being audited, have been audited, are under preliminary audit or are being investigated;

 

 

 

 

 

 

(b) 

no indication of non-compliance is found; or

 

 

 

 

 

 

(c) 

indications of non-compliance and estimated potential tax obligations that have not been fulfilled are found.

 

 

 

 

 

(7) 

The conclusion referred to in number (6) letter (a) is followed up with the forwarding of Data and/or Information to:

 

 

 

 

 

 

(a) 

Audit Implementing Unit, as additional data in the audit process or to be examined whether it contains new data that has not been revealed in the completed audit (novum);

 

 

 

 

 

 

(b) 

Preliminary Audit Unit, as additional data in the preliminary audit process; or

 

 

 

 

 

 

(c) 

Investigation Unit, as additional data in the investigation process.

 

 

 

 

 

(8) 

Data and/or Information referred to in number (7) are forwarded through the Supervision Information System which is integrated with the Audit Information System and/or Law Enforcement Information System.

 

 

 

 

 

(9) 

In the event that the mechanisms for forwarding Data and/or Information referred to in number (8) cannot be accommodated, Data and/or Information are forwarded by submitting an official memorandum concerning the forwarding of data and/or information from the Head of the Tax Office to the Audit Implementing Unit, Preliminary Audit Unit or Investigation Unit.

 

 

 

 

 

(10) 

The conclusion referred to in number (6) letter (b), is not followed up and it is stated that no indication of non-compliance is found.

 

 

 

 

 

(11) 

The conclusion referred to in number (6) letter (c) may be followed up by:

 

 

 

 

 

 

(a) 

request for an explanation of Data and/or Information;

 

 

 

 

 

 

(b) 

proposed audit; or

 

 

 

 

 

 

(c) 

proposed preliminary audit.

 

 

 

 

 

(12) 

Implementation, conclusion and follow-up to the Material Compliance Examination at the Tax Office are outlined in the KKPt and LHPt signed by the Head of the Tax Office and employees of the Tax Office who have the duties and functions of Supervision/Tax Supervision Team.

 

 

 

 

 

(13) 

LHPt referred to in number (12) is prepared provided that 1 (one) LHPt is prepared for 1 (one) Tax Year, which may include:

 

 

 

 

 

 

(a) 

one, several or all taxes; and

 

 

 

 

 

 

(b) 

one or several Taxable Periods,

 

 

 

 

 

 

for all Data and/or Information contained in the Supervision Information System during the Material Compliance Examination.

 

 

 

 

 

(14) 

In the event that after the completion of the KKPt and/or LHPt, the following conditions are discovered or found:

 

 

 

 

 

 

(a) 

there are misspellings and/or administrative recording/selection errors caused by human errors, such as errors in Taxpayer Identification Numbers, Taxpayers’ names, types of taxes, Taxable Period/Tax Years/Fractions of Tax Years or other administrative errors; and/or

 

 

 

 

 

 

(b)

there are Data and/or Information in the Supervision Information System that have not been included in the KKPt and LHPt,

 

 

 

 

 

 

the KKPt and/or LHPt may be amended. For Strategic Taxpayers, amendments to the KKPt and/or LHPt are preceded by a notification to the Supervisor concerning the acquisition of the said Data and/or Information.

 

 

 

 

 

(15) 

Material Compliance Examination at the Tax Office referred to in number (1) is carried out according to Procedures for the Implementation of Material Compliance Examination at the Tax Service Office stated in Appendix HH which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(16) 

KKPt and LHPt referred to in number

 

 

 

 

 

(12) 

are prepared according to the sample form stated in Appendix II which constitutes an integral part of Director General Circular Letter.

 

 

 

 

 

(17) 

Amendments to the KKPt and/or LHPt referred to in number (14) are carried out according to Procedures for Amendments to the Results of Material Compliance Examination at the Tax Office stated in Appendix JJ which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(18) 

Amendments to KKPt and/or LHPt are outlined in the Official Report of Change prepared through the Supervision Information System according to the sample form stated in Appendix KK which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

b) 

Material Compliance Examination of Strategic Taxpayers

 

 

 

 

 

(1) 

Material Compliance Examination of Strategic Taxpayers at the Tax Office is carried out by Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Strategic Taxpayers in DPP.

 

 

 

 

 

(2) 

Material Compliance Examination referred to in letter a) number (2) and letter b) number (1) is carried out for the fulfillment of tax obligations through:

 

 

 

 

 

 

(a) 

Examination for the current Tax Year; and

 

 

 

 

 

 

(b) 

Comprehensive Examination for the Tax Year prior to the current Tax Year.

 

 

 

 

 

(3) 

Examination for the current Tax Year referred to in number (2) letter (a) is carried out by taking into account the following provisions:

 

 

 

 

 

 

(a) 

Examination for the current Tax Year is carried out on the Taxable Period in which the filing and payment are due in the current year.

 

 

 

 

 

 

(b) 

Examination may be conducted on one or several types of taxes based on all data and/or information held and/or obtained by the DGT.

 

 

 

 

 

 

(c) 

Results of the Examination referred to in letter (a) containing the implementation, the conclusion referred to in letter a) number (6) and the follow-ups referred to in letter a) number (7), number (10) and number (11) are outlined in the KKPt and LHPt signed by the Head of the Tax Office and Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Strategic Taxpayers.

 

 

 

 

 

 

(d) 

LHPt is prepared in the Supervision Information System.

 

 

 

 

 

(4) 

Comprehensive Examination for the Tax Year prior to the current Tax Year referred to in number (2) letter (b) is carried out by taking into account the following provisions:

 

 

 

 

 

 

(a) 

Based on the DPP referred to in number (1), the Head of the Tax Office issues an official memorandum concerning the assignment of Supervision of Strategic Taxpayers to the Supervisor/Tax Supervision Team.

 

 

 

 

 

 

(b) 

Based on the official memorandum referred to in letter (a), the Supervisor according to his/her knowledge and experience supervises the Examination through joint conferences with Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Strategic Taxpayers.

 

 

 

 

 

 

(c) 

Comprehensive Examination of a Tax Year is carried out after the Taxpayers file the Annual Income Tax Return or after the end of the deadline for filing the Annual Income Tax Return pursuant to tax provisions.

 

 

 

 

 

 

(d) 

Comprehensive Examination of all taxes is carried out through:

 

 

 

 

 

 

 

i. 

analysis of the risk profile based on CRM and other Business Intelligence held by the DGT;

 

 

 

 

 

 

 

ii. 

analysis of tax filing and payment as well as the conformity of Taxpayers’ profile data, including the filing of Tax Returns, tax payment and conformity of Business Classification (KLU);

 

 

 

 

 

 

 

iii. 

analysis of the Taxpayers’ business processes, including Input-Output- Based Business Process Analysis of Tax Invoice Objects and Export- Import-Based Business Process Analysis;

 

 

 

 

 

 

 

iv. 

analysis of financial statements, including analysis of balance sheets, analysis of income statements, analysis of cash flow statements and analysis of changes in equity, analysis of notes to financial statements, and/or analysis of other financial statements according to applicable accounting standards;

 

 

 

 

 

 

 

v. 

analysis of Transfer Pricing and International Taxation. This analysis must be carried out in the event that there are controlled transactions as stated in special attachments 3A and 3B of the Annual Income Tax Return;

 

 

 

 

 

 

 

vi. 

analysis based on mirroring of results of valuation, audits, objections, appeals, lawsuits and civil reviews;

 

 

 

 

 

 

 

vii. 

analysis of internal and external data, including Data and/or Information from Agencies, Institutions, Associations or Other Parties data, Eol data and financial information data. This Examination is carried out through, among others, trigger data, test data and other data presentation methods;

 

 

 

 

 

 

 

viii. 

analysis in the context of following up the LHA and/or LIP of the DGT Head Office and the LHA and/or LIP of the DGT Regional Office; and

 

 

 

 

 

 

 

ix. 

Visits toTaxpayers’ location.

 

 

 

 

 

 

 

All of the abovementioned activities must be carried out, unless no data and/or information is available or there is a force majeure resulting in the Examination infeasible, with an explanation/information in the KKPt and/or LHPt.

 

 

 

 

 

 

(e) 

In the context of the analysis of International Transfer Pricing and Taxation referred to in letter (d) point v, if there is a task force in respect of the handling of Transfer Pricing at the DGT Head Office and/or the Transfer Pricing Handling Team at the DGT Regional Office, the following activities may be carried out:

 

 

 

 

 

 

 

i. 

Head of the Tax Office may submit a proposal to the Head of the DGT Regional Office to be assisted in the analysis of International Transfer Pricing and Taxation after conducting an initial analysis of Transfer Pricing and International Taxation;

 

 

 

 

 

 

 

ii. 

Head of the DGT Regional Office establishes and assigns Transfer Pricing Handling Team of the DGT Regional Office consisting of, among others, the Head of Tax Potential Monitoring and Data Division, Head of Tax Audit, Collection, Intelligence and Investigation Division, Head of Section in Tax Potential Monitoring and Data Division and Tax Audit, Collection, Intelligence and Investigation Division and Functional Tax Auditor deemed to have adequate knowledge in the field of Transfer Pricing and International Taxation, to provide assistance referred to in point i;

 

 

 

 

 

 

 

iii. 

Transfer Pricing Handling Team of the DGT Regional Office monitors and evaluates the progress/realisation in respect of Transfer Pricing handling within the DGT Regional Office;

 

 

 

 

 

 

 

iv. 

if necessary and based on the Head of the DGT Regional Office’s considerations, the Transfer Pricing Handling Team of the DGT Regional Office may synergize in providing assistance together with the Transfer Pricing Handling Task Force of the DGT referred to in the Director General of Taxes Decree concerning the establishment of a Transfer Pricing Task Force within the DGT and the amendments thereto.

 

 

 

 

 

 

(f) 

Visits referred to in letter (d) point ix, may not be carried out by taking into account the previous Visit Report.

 

 

 

 

 

 

(g) 

To improve the quality of the Comprehensive Examination results, a joint conference may be conducted on Strategic Taxpayers involving the Functional Tax Auditor, other Heads of Division and/or the DGT’s internal parties deemed relevant, but the responsibility for the Examination process and results remains with the Tax Office employees that supervise Strategic Taxpayers assigned to the said Strategic Taxpayers.

 

 

 

 

 

 

(h) 

Comprehensive Examination Results referred to in letter (d) which contain the implementation, conclusions referred to in letter a) number (6) and follow-ups referred to in letter a) number (7), number (10) and number (11) are outlined in the KKPt and LHPt signed by the Head of the Tax Office, Supervisor and Tax Office employees who have the duties and functions of Supervision/Tax Supervision Team of Strategic Taxpayers.

 

 

 

 

 

 

(i) 

LHPt is prepared in the Supervision Information System and approved no later than 5 (five) working days after the joint conference referred to in letter (b). If within that period, no approval is given, the LHPt is escalated to the Head of the Tax Office for an immediate decision.

 

 

 

 

 

 

(j)

In the event that when Comprehensive Examination is to be carried out, it is known that Strategic Taxpayers have been included in the List of Tax Data Analysis Targets, are being audited or have been audited and if the audit is carried out on all taxes, the following follow-ups are carried out:

 

 

 

 

 

 

 

i. 

if the audit process is in the proposal stage, the Examination is postponed until the issuance of an Audit Order or a decision on the rejection of the audit proposal;

 

 

 

 

 

 

 

ii. 

if an Audit Order has been issued, Material Compliance Examination is carried out on Data and/or Information with the conclusion that the LHPt in the form of the Taxpayers are being audited, have been audited, are under a preliminary audit or are being investigated and followed up with the forwarding of Data and/or Information referred to in letter a) number (7).

 

 

 

 

 

 

(k) 

In the event that when Comprehensive Examination is to be carried out, it is known that the Strategic Taxpayers have been included in the List of Tax Data Analysis Targets, are being audited or have been audited and if the audit is carried out on one or several types of taxes, the Strategic Taxpayers are followed up, as follows:

 

 

 

 

 

 

 

i. 

if the audit process is in the proposal stage:

 

 

 

 

 

 

 

 

i) 

if Comprehensive Examination has not been carried out, Comprehensive Examination shall be carried out but the Data and/or Information in respect of the type of tax and Taxable Period proposed or being audited are not included in the calculation of tax potential estimates;

 

 

 

 

 

 

 

 

ii) 

if Comprehensive Examination has been carried out, Examination is not carried out and the Data and/or Information in respect of the type of tax and Taxable Period proposed for an audit are followed up with the forwarding of Data and/or Information referred to in letter a) number (7);

 

 

 

 

 

 

 

ii. 

if an Audit Order has been issued:

 

 

 

 

 

 

 

 

i)

if Comprehensive Examination has not been carried out, Comprehensive Examination shall be carried out but the Data and/or Information in respect of the type of tax and Taxable Period being audited are not included in the calculation of tax potential estimates;

 

 

 

 

 

 

 

 

ii) 

if Comprehensive Examination has been carried out, Examination is not carried out and the Data and/or Information in respect of the type of tax and Taxable Period being audited are followed up with the forwarding of Data and/or Information referred to in letter a) number (7);

 

 

 

 

 

 

(l) 

In the event that the proposed audit in letter (j) point i is known to be not approved by the Tax Office Compliance Committee but there are indications of non-compliance and estimated potential tax obligations that have not been fulfilled, Comprehensive Examination is carried out.

 

 

 

 

 

 

(m) 

In the event that during the Examination process, the proposed audit in letter (k) point i point i) is known to be not approved by the Tax Office Compliance Committee but indications of non-compliance and estimated potential tax obligations that have not been fulfilled are found, Comprehensive Examination is carried out.

 

 

 

 

 

 

(n) 

Comprehensive Examination is excluded from proposed routine audits for Strategic Taxpayers and carried out pursuant to the Director General of Taxes Circular Letter concerning audit policies.

 

 

 

 

 

 

(o) 

Proposed routine audits of excluded Strategic Taxpayers referred to in letter (n) are:

 

 

 

 

 

 

 

i. 

Taxpayers with audit criteria of Taxpayers that have been given preliminary tax refunds referred to in Article 17C and Article 17D of the General Provisions and Tax Procedures Law or Article 9 paragraph (4c) of the VAT Law;

 

 

 

 

 

 

 

ii. 

Taxpayers filing Tax Returns stating a loss;

 

 

 

 

 

 

 

iii. 

Taxpayers that change the accounting year, accounting methods and/or revaluate fixed assets; and/or

 

 

 

 

 

 

 

iv. 

other proposed routine audits stipulated under the Director General of Taxes Circular Letter concerning audit policies.

 

 

 

 

 

(5)

In the event that Strategic Taxpayers are found that were formerly Other Taxpayers and/or Strategic Taxpayers that have been subject to Examination of one or several types of taxes in the current Tax Year, comprehensive Material Compliance Examination is carried out.

 

 

 

 

 

(6) 

Repeated comprehensive Material Compliance Examination referred to in number (5) is carried out taking into account the following:

 

 

 

 

 

 

(a) 

there is Examination of one or more types of taxes and/or one or more ongoing Taxable Periods;

 

 

 

 

 

 

(b) 

Comprehensive Examination is carried out on all taxes, all Taxable Periods in one Tax Year and all obtained data.

 

 

 

 

 

(7) 

Material Compliance Examination of Strategic Taxpayers is carried out according to Procedures for the Implementation of Material Compliance Examination of Strategic Taxpayers at the Tax Office stated in Appendix LL which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

 

(8)

The assignment of Supervisors in the context of Material Compliance Examination of Strategic Taxpayers is carried out according to Procedures for the Assignment of Supervisors in the Context of Material Compliance Examination of Strategic Taxpayers stated in Appendix MM which constitutes an integral part of this Director General of Taxes Circular Letter.

 

 

 

 

c) 

Material Compliance Examination of Other Taxpayers with substantial tax revenue contributions

 

 

 

 

 

(1) 

Material Compliance Examination of Taxpayers referred to in number 1 letter ss number 1) letter b) with substantial tax revenue contributions may be carried out by Thorough Examination.

 

 

 

 

 

(2) 

Thorough Examination referred to in number (1) is not carried out in the event that the Taxpayers are proposed to be audited pursuant to the Director General of Taxes Circular Letter concerning guidelines for Company Group audits.

 

 

c. 

Request for an Explanation of Data and/or Information

 

 

 

1) 

Issuance and Submission of SP2DK

 

 

 

 

a)

In the context of Supervision, the Head of the Tax Office is authorised to carry out Request for an Explanation of Data and/or Information with the issuance of a SP2DK through the Supervision Information System and signed by the Head of the Tax Office.

 

 

 

 

b) 

SP2DK is submitted to Taxpayers in the following manner:

 

 

 

 

 

(1) 

sent by facsimile;

 

 

 

 

 

(2) 

sent using postal/courier/forwarder services with proof of postage; and/or

 

 

 

 

 

(3) 

submitted directly to Taxpayers through Visits or when the Taxpayers come to the Tax Office,

 

 

 

 

 

no later than 3 (three) working days from the issuance date of the SP2DK.

 

 

 

 

c) 

SP2DK is also submitted electronically through the Taxpayers’ DJP Online account if:

 

 

 

 

 

(1)