Appeal Explanation Letter if Article 26A(4) of GPTP Law is Fulfilled
JAKARTA, DDTCNews — The Directorate General of Taxes (DGT) has set out the details that must be included in an appeal explanation letter where the provisions under Article 26A paragraph (4) of the General Provisions and Tax Procedures (GPTP) Law are fulfilled. This topic is featured in the national media reviews today, Wednesday (26/8/2026).
The appeal explanation letter submitted by the DGT to the tax court will set out the chronology of the borrowing of books of accounts, records, data, information or other details not considered in the objection resolution due to the fulfilment of Article 26A paragraph (4) of the GPTP Law.
Under that paragraph, books of accounts, records, data, information or other particulars shall not be considered during an objection if such books of accounts, records, data, information or other details were not provided by the taxpayer at the time of audit.
"in the event that the provisions stipulated under Article 26A paragraph (4) of the GPTP Law are fulfilled, the chronology of the borrowing of books of account, records, data, information and/or details not considered in the objection resolution must be described," reads SE-6/PJ/2026.
The chronology of the borrowing of books of accounts, records, data, information and/or details not considered must describe: the request letter for the borrowing of books of accounts, records and/or documents; the first warning letter; the second warning letter.
Further, the official report on the fulfilment of obligations for the borrowing or request for books of accounts, records and/or documents; the official report concerning the provision of data, information, details and/or explanations by the taxpayer; and/or the taxpayer's statement letter confirming that no documents exist.
Additionally, the appeal explanation letter must also contain details of the books of accounts, records, data, information and/or details not considered in the objection where Article 26A paragraph (4) of the GTA is fulfilled.
Not only that, where the taxpayer, as the appellant, submits evidence not provided at the time of the audit, the DGT's hearing team must state that such evidence cannot be considered pursuant to Article 26A paragraph (4) of the GTA.
"In the event that the appellant submits evidence not provided at the time of the audit, other than the evidence that at the time of the audit had not been obtained from a third party, the hearing team shall express the opinion in the official report of evidentiary examination that the evidence cannot be considered pursuant to the provisions under Article 26A paragraph (4) of the GPTP Law," reads SE-6/PJ/2026.
For information, SE-6/PJ/2026 is a new circular letter issued by the DGT as implementing instructions for the handling of appeal and lawsuit hearings at the Tax Court.
The circular letter was issued with a view to providing clarity, creating uniformity and improving the quality of the handling of appeal and lawsuit hearings.
In addition to the above topic, there are reviews concerning the debt burden, which is considered to be increasingly eroding fiscal space. There is also a discussion relating to the Directorate General of Customs and Excise's (DGCE's) proposed budget for next year, the land and building tax (L&B Tax) revenue target for 2027, the financing of village cooperatives through the state budget and other matters.
The following is a review of the other tax articles.
L&B Tax Revenue Target for 2027 Set Higher
The government has set a land and building tax (L&B Tax) revenue target for the plantation, forestry, oil and gas mining, mining for geothermal concession, mineral and coal mining sectors and other sectors (sektor perkebunan, perhutanan, pertambangan minyak dan gas bumi (migas), pertambangan untuk pengusahaan panas bumi, pertambangan minerba, dan sektor lainnya/L&B Tax-P5L in Indonesian) of IDR28.60 trillion for budget year 2027.
The L&B Tax-P5L revenue share reaches 1.1% of total tax revenue, which is projected at IDR2,591.40 trillion in the draft state budget (rancangan anggaran penerimaan dan belanja negara/RAPBN in Indonesian) for 2027.
"Supported by favourable conditions as well as the strengthening of tax administration and more effective supervision of taxable objects, L&B Tax revenue in 2027 is targeted to reach IDR28.60 trillion," the government wrote in Volume 2 of the Financial Note and draft state budget 2027. (DDTCNews)
DGCE's Proposed Budget for Next Year
The government has proposed a budget allocation for the Directorate General of Customs and Excise (DGCE) of IDR4.09 trillion for 2027.
Based on the 2027 Work Plan and Budget of Ministries/Institutions (Rencana Kerja dan Anggaran Kementerian Negara/Lembaga/RKA-K/L in Indonesian), the DGCE's budget ceiling is sourced entirely from counterpart funds. The budget will be used to run 3 programmes, namely the state revenue management programme, the fiscal policy, financial sector and economic programme and the management support programme.
"Details of central government expenditure budget for the 2027 fiscal year by budget section, organisational unit, function, programme and source of funds: Directorate General of Customs and Excise IDR4.09 trillion," the government wrote in Volume 3 of the Compilation of Ministries/Institutions' Work Plans and Budgets for the 2027 Fiscal Year. (DDTCNews)
Debt Interest Burden Seen as Increasingly Eroding Fiscal Space
The government's debt interest burden continues to rise and is beginning to squeeze fiscal space. In the draft state budget 2027, the government has allocated IDR650.31 trillion to service debt interest, an increase of 11.69% from this year's outlook.
This increase stems primarily from domestic debt interest payments, which amount to IDR589.68 trillion, up 9.64%. Meanwhile, external debt interest payments reach IDR60.63 trillion, a surge of 36.46%.
The interest burden is estimated to absorb approximately 19% of state revenues in 2027. With a low revenue-to-GDP ratio, the government's capacity to provide room for productive expenditure remains limited. (Kontan)
Income Tax Remains the Mainstay, Targeted IDR1,277.7 Trillion in 2027
The government is targeting income tax revenue of IDR1,277.7 trillion in the draft state budget 2027. The development of income tax revenue is deemed one of the key indicators for assessing the condition of the business sector and national economic activity.
The income tax revenue share reaches 49.31% of total tax revenue targeted at IDR2,591.4 trillion in 2027. This implies that income tax contributes nearly half of total tax revenue for the coming year.
"Income tax is the largest source of tax revenue, the performance of which is heavily influenced by developments in business-sector profitability, household income levels and commodity price dynamics, particularly in the natural resources sector," the government wrote in Volume II of the Financial Note and draft state budget 2027. (DDTCNews)
State Budget Becomes the Debt-Bearing Pocket
The government's credibility in managing public finances has once again been called into question, as the state must bear the instalment payments owed by the Red and White Village/Subdistrict Cooperatives (Koperasi Desa/Kelurahan Merah Putih in Indonesian) to state-owned banks. The crux of the issue is that the funds channelled by the Association of State-Owned Banks (Himpunan Bank-Bank Milik Negara/Himbara in Indonesian) originate from the state's own coffers.
The urgency of placing the budgetary surplus balance (Saldo Anggaran Lebih/SAL in Indonesian) with the Association of State-Owned Banks has also been questioned, given that the funds channelled for loans originate from the government and it is likewise the government that services the instalments.
The Association of State-Owned Banks' credit loan ceiling to village cooperatives is IDR3 billion per cooperative unit. The Ministry of Finance plans to channel IDR40 trillion per year to the Association of State-Owned Banks, bringing the total payments over 6 years to IDR240 trillion. (Bisnis Indonesia)
