SP2DK: Get to Know the Procedure First, Respond Later

The Request for Explanation of Data and/or Information (SP2DK) has often been associated with the tax authority's efforts to increase tax revenue. This has created a negative perception among taxpayers.

To mitigate this negative impression, the government plans to make editorial and visual adjustments to the SP2DK. So, what exactly is an SP2DK, and how should taxpayers respond when they receive one?

An SP2DK is a letter issued by the Account Representative (AR) of the Tax Office (KPP) to request data clarification from taxpayers. In addition to providing services and consultations to taxpayers, the role of the AR has now been expanded to include responsibility for oversight.

Read: The Role of Tax Account Representative is Rearranged

The Process of Issuing an SP2DK

An SP2DK is issued when there is a discrepancy between the data held by the tax office and the data reported by the taxpayer.  If it is found that the taxpayer has made errors in fulfilling their obligations, they can make corrections to their tax returns (SPT). Additionally, taxpayers can make payments if there are taxable objects that have not yet been deposited. 

However, to respond appropriately, taxpayers should understand the process of issuing an SP2DK as follows:

1. SP2DK Issuance

After issuing an SP2DK, the Directorate General of Taxes (DGT) will give taxpayers time to submit their responses, no later than 14 calendar days from the date of the SP2DK.

For your information, AR can issue an SP2DK more than once in the same year, allowing taxpayers to receive multiple SP2DKs as long as the SP2DK has not been closed or the Report on the Execution of P2DK has not been issued by the Tax Office.

2. Submission of Responses by Taxpayers

Responses can be provided in person, through audiovisual means (not face-to-face), or in writing. Explanations can be submitted more than once if necessary.

3. On-Site Visits

If the taxpayer does not provide an explanation within the specified time, the SP2DK can be followed up with an on-site visit. This visit is intended to validate the explanations received from the taxpayer.

4. Discussion

If the examination of the taxpayer's explanation does not yield conclusions and further recommendations, the head of the Tax Office can follow up by holding a discussion and inviting the taxpayer.

5. Conclusions and Recommendations

Based on the examination results, the Audit Team will provide conclusions and recommend follow-up actions.

Taxpayer Response

There are several key points taxpayers should consider when responding to an SP2DK they receive, including:

1. Communication and Good Faith

Taxpayers need to demonstrate good faith when receiving an SP2DK from the AR, such as by maintaining open communication. These two aspects are just as crucial as the content of the SP2DK explanation itself.

2. Request the SP2DK Worksheet

Before providing an explanation, taxpayers can request the SP2DK worksheet from the tax office. By reviewing the worksheet, taxpayers can conduct further analysis and identify data discrepancies between their records and those of the AR.

3. Prepare an Explanation

Taxpayers must be able to explain the data discrepancies between what is presented by the AR and their own records. Ensure the explanation is submitted within the specified timeframe.

If the explanation cannot be completed by the deadline, taxpayers may submit a partial response and request an extension.

The explanation should ideally include legal grounds, detailed transaction explanations, and supporting documents. This will effectively address the identified data discrepancies.

SP2DK Research Objects

The explanations or data provided by taxpayers should be relevant to the research objects of SP2DK (Request for Tax Data and Information). Below are the common tax objects frequently addressed in SP2DK:

a. Business Revenue

Business revenue is a common comparison object in SP2DK. Typically, the Tax Officer (AR) compares the business turnover reported in the Corporate Income Tax Return (SPT PPh Badan) with the total Output Tax in the Value Added Tax Return.

b. Cost of Goods Sold (COGS)

Elements of COGS, such as purchase amounts, shipping costs, and other expenses reported in the Corporate Income Tax Return, often receive attention from the Tax Officer.

c. Operating and Selling Expenses

Operating and selling expenses are frequently compared with the objects in Income Tax Return Article 21, Article 23, Article 26, and final income tax. Tax Officers will verify the company's tax compliance concerning these expenses.

d. Other Income & Expenses

It is common for Tax Officers to request explanations about the nature of transactions and supporting documents. If these accounts involve income tax and VAT objects, taxpayers must ensure proper withholding and collection have been conducted.

e. Transactions with Related Parties

Taxpayers should prepare contracts and other documents to ensure transactions with related parties comply with tax regulations.

In this context, SP2DK serves as an effective control tool to ensure taxpayer compliance while operating within the framework of our self-assessment tax system. (ASP/KEN)