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Dec 13, 2007

Taxpayer's Right in Tax Return

Extension of time to file the Annual Tax Return

One of taxpayer rights is extension of time to file the annual tax return. This right is suitable for taxpayer who can’t finish the audit process during the first three month of its book year so that it must to file the annual tax return after the due date of tax return.

The Director General of Taxation may, at the request of a taxpayer, extend the period for filing an annual tax return for a maximum period of 6 months The request shal be in writing and accompanied by a statement estimating the amount of tax due for 1 (one) tax year and proof of setlement of the tax due.

The form which taxpayer should use is 1771 Y or 1770 Y (income tax) and 1721 Y for Article 21 Income Tax.

Amendment of a Tax Return

A taxpayer may on his own initiative amend a tax return that has been filed by submiting a writen statement within two years from end of a tax period, part of a tax year, or a tax year, provided the Director General of Taxation has not started an audit.

Where the taxpayer amends the tax return himself resulting in an increase in the amount month of tax due, the taxpayer wil be subject to a penalty of 2% (two percent) interest per month on the amount of tax underpaid, calculated from the filing due date of the tax return up to the date of payment resulting from amendment of the tax return.

If an audit has been done, but an investigation has not been conducted into wrong doing commited by a taxpayer, there shal be no investigation of the wrong doing of the taxpayer if the taxpayer on his own initiative discloses the erors and pays any tax underpaid along with a fine equal to twice the amount of tax underpaid.

If the period for amending a tax return as prescribed in paragraph (1) has lapsed, provided the Director General of Taxation has not issued a tax assessment, a taxpayer may on his own initiative disclose in a separate report nay inaccuracy in the completion of a tax return already filed, which causes:

i. the amount of tax payable to increase; or

ii. the loses based on the tax payable to increase; or

iii. the total assets to increase; or

iv. the total equity to increase.

Any tax underpayment arising from the disclosure of inaccuracies in completing a tax return as prescribed in article 8 paragraph (4) along with penalty of 50% of the amount of tax underpaid, shal be paid by a taxpayer before submission of the above report.

Although the period alowed for amending a tax return as refered to in paragraph (1) has lapsed and as long as the Director General of Taxation has not initiated an audit, a taxpayer may amend the annual income tax return already filed in either of these situations:

i. The taxpayer receives a Decisions Leter on an objection to a tax assessment of a previous year’s tax return and the amount of fiscal loss stated on the Decision Leter is diferent from the tax assessment; or

i. The taxpayer receives a Decision Leter on an appeal to an objection to a tax assessment of a previous year’s tax return and the amount of fiscal loss stated on the Decision Leter is diferent from the amount stated on the Decision Leter on the objection. This amendment should be done within 3 months after the Decision Leter on the objection or appeal is received. (Article 8 Law No. 16 Year 2000)

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