The Director-General of Taxes issued Regulation Number PER-5/PJ/2023 on the Acceleration of Overpaid Tax Refunds, which has been in force since 9 May 2023. With this regulation, the Government has simplified the process of the preliminary refunds for individual tax settlements (Preliminary Refund) from 12 months to 15 working days.
Tax refund or restitution is applied for by taxpayers to the government to refund their overpaid tax. Restitution can occur when there is an error in collecting or withholding tax which results in overpayment of tax, or when there is an error in calculating the tax in the Tax Return (SPT). Taxpayers are entitled to their overpaid tax, and the Government is obligated to return it.
Those who are eligible for the simplification process of Preliminary Refund are individual taxpayers who request restitution in accordance with Article 17B and 17D of the Law on General Taxation Provisions and Procedures with certain requirements. For example, taxpayers who do not own any businesses or are not freelance operators, or those who indeed own businesses or are freelance operators of certain sizes who have overpaid taxes of up to certain amounts.
It is expected that the faster restitution process offered by the regulation can help improve the cash flows of taxpayers. Also, this faster process can minimize inappropriate interventions thereby ensuring accountability.
Individual taxpayers who have submitted their annual tax returns (SPT) of their income tax (PPh) and have overpaid in the amount of up to Rp 100 million may submit their applications for the overpaid tax refunds. The application for the Preliminary Refunds is then followed up with a decree of the Preliminary Refund and a request for domestic bank account information under the name of the tax refund applicants, the two of which are issued no later than 5 days after the application is submitted.
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