Dismissing Investment Obstacle Rumours, DGT Responds to Claims of Japanese FDI Difficulty in Claiming Tax Refunds

Issues regarding obstacles in the disbursement of tax refunds for foreign investors have become a major focus of attention. Responding to reports in Japanese media suggesting that companies from the Land of the Rising Sun are facing hurdles, the Directorate General of Taxes (DJP) has addressed claims that Japanese FDI is struggling to claim tax restitutions. The Director General of Taxes, Bimo Wijayanto, provided an official clarification to correct perceptions developing among international business actors.

Bimo emphasised that the entire process of returning tax overpayments, or restitutions, in Indonesia is conducted very strictly, following established procedures and applicable Standard Operating Procedures (SOP). This is done to ensure that every rupiah returned to taxpayers has undergone valid and accountable verification.

“Everything has its procedure. We conduct examinations, and once the audit is complete, we disburse the restitution in accordance with the SOP, including regarding deadlines and all other provisions,” Bimo stated when speaking to journalists at the Indonesian Parliament Complex on Tuesday (1/9).

Transparency of Audit Processes and Handling Stages

During the session, the DGT addressed the claims regarding Japanese FDI difficulties by presenting data on ongoing tax restitution handling. Currently, the Directorate General of Taxes is processing approximately 40 companies under the radar of tax restitution handling. Of that total, 38 companies have entered the active processing stage.

Bimo explained that each company is at a different stage, depending on the complexity of the data and field findings. The following is an overview of the handling stages currently being undertaken by the DGT:

• Preliminary Evidence Stage (Bukper): Some companies are in the process of collecting initial evidence to determine indications of violations.

• Completion of Preliminary Evidence Stage: Several companies have completed the preliminary evidence stage and moved to the next phase.

• Cash Building & Supervision Stage: The stage of monitoring cash flows and supervising taxpayer compliance.

• Audit Stage: An in-depth stage to verify the accuracy of financial reports and tax obligations.

Interestingly, the majority of companies currently undergoing this process operate in a specific sector, namely scrap steel management or used steel processing. This indicates that strict supervision is being applied to sectors with high risks regarding tax compliance.

Application of the Ultimum Remedium Principle

In response to the dynamics of tax case handling, the DGT addressed the claims regarding Japanese FDI by introducing a more educative and persuasive approach through the principle of ‘ultimum remedium’. This principle provides taxpayers with the opportunity to rectify their errors without facing imprisonment.

Bimo explained that if strong evidence of a violation is found during the investigation process, the case may escalate to criminal proceedings. However, the DGT provides an option for taxpayers to choose a peaceful resolution through the fulfilment of their payment obligations.

With this option available, it is hoped that business actors, including investors from Japan, will be more cooperative in meeting their tax obligations. The DGT is committed to maintaining a balance between firm law enforcement and providing ease of doing business for foreign investors in Indonesia.

In closing, this clarification is expected to dampen the unrest among international investors. The DGT addressed the claims regarding Japanese FDI difficulties to reaffirm that legal certainty is the top priority. Restitutions will continue to be disbursed as long as all audit stages are completed in accordance with existing regulations, thereby ensuring the credibility of the investment climate in Indonesia remains intact.