Starting from May 2012, the procedure of the tax payable write-off is now clearly stated on the Finance Minister Regulation No. 68/PMK.03/2012, including its amount estimation. The tax payables which may be written-off are limited to the following:

1. Tax Collection Letter;
2. Tax Underpayment Assessment Notice;
3. Tax Additional Underpayment Assessment Notice;
4. Notification Letter on Tax Payable;
5. Tax Assessment Notice;
6. Additional Tax Assessment Notice; and
7. Decision Letter on Correction, Decision Letter on Objection, Appeal Verdict, Judicial Review Verdict, which result in additional tax payables.

The write off is allowed for uncollectible tax payables which are under the following conditions:

1. The Individual Taxpayer and/or the party bearing the tax passes away and does not inherit any heritages or property;
2. The Individual Taxpayer and/or the party bearing the tax is unreachable;
3. The Corporate Taxpayer is closing its business, liquidated or bankrupted, and the party bearing the tax is unreachable;
4. The tax collection right is expired;
5. Documents as a basis of tax collection are not found, and an optimal search has been conducted  based on the tax provisions; or
6. The Country’s rights to conduct the tax collection cannot be performed due to certain conditions related to the changes of policy and/or consideration of the Finance Minister.

Investigation

To reassure the condition of the Taxpayer or the uncollectible payables, the Tax Bailiff from the Tax Office will perform a local or administrative investigation. The result of this investigation will be stated in the investigation result report. This report should explain the condition of related Taxpayer and the payables as a basis of the determination of the uncollectible payable amount proposed to be written-off.

Referring to the report, the Head of Tax Office will arrange a list of the tax payable write-off proposal  to be forwarded to the Head of DGT Regional Office within its regional working authority. DGT will further propose the payable write-off to the Finance Minister. The review shall be conducted by the Inspectorate General of the Finance Ministry, which result will base the Finance Minister’s decision on the on the tax payable write-off proposals.

The Determination of Details, Collection Write-Off and Book Write-Off on Taxpayer’s Tax Payables After an Approval Decision is issued by the Finance Minister, DGT will release the details of the taxpayer’s tax payable write-off, including the collection right and recording right. The collection right write-off and the recording right write-off upon the tax payable are determined in compliance with the prevailing Government Accounting Standards (Source: Resume of Finance Minister Regulation Number 68/PMK.03/2012).