PPYSTT Application for VAT Over-Collection: Here is the Process

Question:

ALLOW me to introduce myself — my name is Lianna. I am a tax officer at a company domiciled in East Java. For your information, our company has been a taxable person (pengusaha kena pajak/PKP in Indonesian) since 2023, and most of our suppliers also hold taxable person status.

Recently, we became aware of an irregularity in a transaction with one of our suppliers. In broad terms, the irregularity in question relates to an error whereby the value added tax (VAT) payable stated on a tax invoice was larger than it should have been, due to various reasons.

In this case, our company has settled payment for that tax invoice; however, we have not yet credited it as input VAT, expensed it, or capitalised it. Further, based on information we received from the supplier concerned, they happen to be subject to an audit for the same taxable period as the tax invoice in question. Consequently, the supplier is unable to submit an amendment to the relevant tax invoice.

Our question is: is there a procedure we can follow to obtain a refund of the tax overpayment that should not have been payable? We would appreciate your explanation.

Lianna, Central Java.

Answer:

THANK you for your question, Ms Lianna. To answer your question, we may refer to Minister of Finance Regulation No. 81 of 2024 on Tax Provisions in the Context of the Implementation of the Coretax Administration System, as last amended by the Minister of Finance Regulation No. 1 of 2026 (MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026). Both regulations essentially govern the procedure for submitting an application for a refund of tax overpayment that should not be payable (permohonan pengembalian atas kelebihan pembayaran pajak yang seharusnya tidak terutang/PPYSTT in Indonesian). See also 'Tax Payments that Should Not Be Payable and Not Eligible for Refund'

Referring to Article 122 paragraph (1) subparagraph c of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026, an application for a refund of tax overpayment that should not otherwise be payable may be submitted where an error has occurred in the withholding tax or tax collection. That provision applies where the withholding tax or income tax is greater than the amount of tax that should have been withheld or collected.

As such, does this regulation also apply to VAT?

To confirm that point, we may refer to Article 129 paragraph (1) subparagraph c of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026. That provision explains that one form of error in the withholding tax or tax collection is VAT collected at an amount greater than the tax that should be collected. See also 'Recognising Various Grounds for PPYSTT on the Coretax Portal'

This provision is further reinforced by Article 130 paragraph (2) of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026, namely that the tax which should not have been collected may be reclaimed by the party from whom it was collected.

Pursuant to both regulations above, it can be understood that your company, as the party subject to the collection, is, in principle, entitled to apply for PPYSTT in respect of this VAT over-collection. However, it is important for you to note the following two conditions for the application to be processed further.

First, if the incorrectly collected VAT has been credited as input VAT by your company, that VAT is deemed to have already been reclaimed by the party subject to the collection (your company), meaning that the application for PPYSTT in respect of this VAT over-collection cannot be further processed. This is as stipulated in Article 130 paragraph (3) of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026.

Second, if the incorrectly collected VAT has (i) not been credited as input VAT, (ii) not been charged to expenses or (iii) not been capitalised in the acquisition cost by your company and (iv) the supplier's periodic VAT return can no longer be amended because an audit has been carried out by the tax authority.

Where the conditions required under the second point above are fulfilled, your company is, in principle, technically entitled to apply for PPYSTT in respect of this VAT over-collection. This is as stipulated in Article 130 paragraph (4) and paragraph (12) of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026.

Accordingly, based on the circumstances you have described above, it can be understood that this case essentially satisfies the second condition above. Therefore, your company is technically entitled to apply for PPYSTT in respect of this VAT overpayment.

As additional information, there are several other matters you should note when applying for PPYSTT, as follows. First, the PPYSTT application may be submitted in writing to the tax office (kantor pelayanan pajak/KPP in Indonesian) or electronically in the Indonesian language. This is as stipulated in Article 131 paragraph (1) of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026.

Second, a sample PPYSTT application form may be found in Appendix W number 4 letter b of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026. The form must be completed with the tax invoice number, the seller's taxpayer identification number, the type of tax, the taxable period/tax year in which the tax invoice is issued, the amount of tax collected as stated on the tax invoice and the amount of refund requested. In addition, the tax invoice that serves as proof of VAT collection must also be attached — if it is not yet available and validated in the DGT's administration system or coretax. This is as stipulated in Article 131 paragraph (4) of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026.

Third, once the application has been submitted, the Director General of Taxes will examine the accuracy of the tax payment. In the course of that examination, the Director General of Taxes may request further documents and/or information from your company. This is as affirmed in Article 132 paragraph (1) and paragraph (2) of MoF Reg. 81/2024 as last amended by MoF Reg. 1/2026.

Fourth, the findings of the examination conducted by the director general of taxes will be set out in an examination result report, and if the examination finds that there is a PPYSTT overpayment, the director general of taxes will issue a notice of tax overpayment assessment, as stipulated under Article 132 paragraph (6), paragraph (7) and paragraph (8) of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026. Meanwhile, the scope of the examination to be conducted by the director general of taxes in respect of this application may be referred to in Article 132 paragraph (4) of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026.

Finally, the director general of taxes must issue either the notice of tax overpayment assessment or a notice of rejection of the PPYSTT application within three months at the latest from the date the PPYSTT application is received. However, if the director general of taxes has not issued the notice of tax overpayment assessment or notice of rejection by that deadline, the PPYSTT application by your company is deemed to have been approved, and the notice of tax overpayment assessment shall be issued by the director general of taxes within five business days at the latest from the expiry of the issuance deadline for the notice. This is as affirmed in Article 137 of MoF Reg. 81/2024, as last amended by MoF Reg. 1/2026.

That concludes our answer. We hope it is helpful.

For your information, the Tax Consultation column is published each week to answer selected questions from loyal DDTCNews readers. If you would like to submit a question, please send it to the following e-mail address: [email protected]. (dik)