In Indonesia's tax system, the concept of interest compensation on overpaid taxes has become a significant issue. The regulatory changes governing interest compensation, particularly the replacement of Article 27A with Article 27B in the General Provisions and Tax Procedures Law (UU KUP), have sparked debates regarding the management of taxpayers' rights. While these changes reflect the government's effort to provide more detailed regulation on taxpayers' rights, they have also prompted criticism due to the limitations imposed.

Transition from Article 27A to Article 27B

Previously, Article 27A served as the basis for regulating the provision of interest compensation to taxpayers who had overpaid their taxes after going through objections, appeals, or judicial reviews. However, with the enactment of Article 27B, several significant changes deserve attention. Although the basic essence of the rule remains the same—granting taxpayers the right to interest compensation on overpaid taxes—Article 27B adds stricter conditions that limit this right.

One of the key changes is the regulation on conditions under which interest compensation can be provided. In some cases, even though taxpayers have overpaid due to inconsistencies in tax audits, they may not always be entitled to interest compensation, depending on the circumstances of the tax payment.

Corrective Justice Perspective

The limitations imposed by Article 27B have sparked criticism, particularly from the perspective of taxpayers' rights. In a self-assessment system, taxpayers bear significant responsibility for calculating, reporting, and paying their tax liabilities. If discrepancies are later found and corrected through objections or appeals, taxpayers should be entitled to interest compensation on the overpaid amount, regardless of when the payment was made.

Article 27B (2) states:
“(2) Interest compensation as referred to in paragraph (1) is given on overpaid taxes up to the maximum amount of the overpayment agreed upon by the taxpayer in the final discussion of the audit results, including: a. Tax Underpayment Assessment Letter; b. Additional Tax Underpayment Assessment Letter; c. Tax Overpayment Assessment Letter; or d. Zero Tax Assessment Letter.”

This clause restricts the interpretation of "overpayment" to only apply to overpayments reported in the Annual Tax Return (SPT) and agreed upon during the final discussion of audit results (PAHP). If overpayment results from payment on a Tax Underpayment Assessment Letter (SKPKB) or Additional Tax Underpayment Assessment Letter (SKPKBT), the taxpayer is not entitled to interest compensation. Moreover, taxpayers who agree to a lower overpayment during the final discussion of audit results (PAHP) will have their claim for overpayment limited to the amount they agreed upon, even if the subsequent outcome of an objection or appeal indicates a higher overpayment. This means that once they accept a lower amount, they forfeit the right to claim any additional overpayment revealed later in the process.

This restriction is considered unfair to taxpayers who should be entitled to interest compensation, especially when an objection or appeal proves that they have overpaid. This contradicts Aristotle's concept of corrective justice, where compensation should be given to the party harmed—in this case, taxpayers who overpaid due to SKPKB or SKPKBT. At the same time, penalties should be imposed on the party at fault—in this case, tax auditors who made errors during the audit.

Penalizing Tax Auditors to Improve Audit Quality

Compensation to harmed taxpayers is not only crucial for upholding justice but also plays a strategic role in improving the quality of future tax audits. When mistakes in audits leading to tax overpayments result in penalties or other consequences for the responsible auditors, this can serve as a learning mechanism to enhance their professionalism and accuracy in the future.

If tax auditors are aware that mistakes in conducting audits could lead to penalties or other career-damaging consequences, they will be more careful in carrying out their duties. This will also encourage tax auditors to develop a deeper understanding of tax regulations and to conduct more thorough and objective analyses. Consequently, the overall quality of audits will improve, reducing the potential for lengthy and costly tax disputes, both for taxpayers and the government.

Penalties for erroneous tax auditors will also strengthen the integrity of the tax system, as it demonstrates that mistakes impact not only taxpayers but also the auditors who make them. Ultimately, this will contribute to improving the quality of tax administration and enhancing public trust in tax authorities.

Interest Compensation is Not an Investment Option for Taxpayers

Although interest compensation provides compensation, the lower interest rates involved mean that this compensation does not fully offset the financial loss suffered by taxpayers. This underscores that interest compensation is not an incentive or benefit, but merely minimal compensation offered by the government as part of its responsibility for tax overpayments caused by inaccurate audits or administrative errors.

Conclusion: A Call for Reassessment

The changes stipulated in Article 27B appear to limit taxpayers' rights to receive interest compensation on overpaid taxes. This creates an imbalance between taxpayers' obligations to comply with tax regulations and their rights to compensation when errors in tax calculations are eventually corrected by tax authorities.

The government should consider reassessing this provision to offer more equitable treatment to taxpayers who have demonstrated good faith in fulfilling their tax obligations. By providing interest compensation more evenly to all taxpayers who experience overpayments, a more transparent and just tax climate can be fostered, which in turn may increase taxpayers' trust in Indonesia's tax system.

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