An income tax overpayment can tie up a significant amount of company cash with the Directorate General of Taxes (DJP). However, identifying an overpaid position in the Annual Income Tax Return doesn’t necessarily mean the company will recover the same amount immediately.
Companies need to confirm the source of the overpayment, validate the supporting tax credits, and determine whether regular restitution, a preliminary refund, or specific PPh 25 treatment applies.
This is particularly relevant under PMK 28/2026, which took effect on May 1, 2026, and introduced the current framework for preliminary tax refunds.
Key Takeaways
- Income tax overpayments can tie up working capital until the recoverable amount is confirmed and returned.
- The reported overpaid amount may change if tax credits or supporting records cannot be validated.
- Annual corporate income tax overpayments generally follow regular restitution or, if eligible, a preliminary refund.
- Certain PPh 25 overpayments arising from recalculation can be refunded or credited in the Annual Income Tax Return.
- PMK 28/2026 provides faster preliminary-refund timelines for qualifying taxpayers, but DJP can still conduct a subsequent examination.
Income tax overpayment recovery at a glance
| Situation | What You Can Do | Timeline | What Businesses Should Know |
| Annual Corporate Income Tax Overpayment | Request a regular refund | Up to 12 months | DJP may examine the tax position before confirming the refund amount. |
| Taxpayer with Certain Criteria | Request a preliminary refund | Up to 3 months | The company must meet the required taxpayer criteria. |
| Qualifying Corporate Taxpayer | Request a preliminary refund | Up to 1 month | Annual turnover must be above IDR 0 and up to IDR 50 billion, with an overpayment of no more than IDR 1 billion. |
| Excess PPh 25 After Recalculation | Request a refund or credit it in the Annual Income Tax Return | Depends on treatment | This option applies only to specific PPh 25 recalculation cases. |
Regular restitution is processed through examination, while PMK 28/2026 offers preliminary-refund routes for eligible taxpayers, providing a faster recovery option.
Why income tax overpayments happen
Income tax overpayments arise when tax paid or credited during the year exceeds the company’s final annual income tax liability.
This may result from PPh 22, PPh 23, foreign tax credits under PPh 24, PPh 25 instalments, or changes in the company’s final taxable position.
Common situations include:
- Revenue or taxable profit falling below earlier projections
- PPh 25 instalments exceeding the final annual liability
- Significant PPh 23 withheld by customers or other parties
- High PPh 22 credits arising from import activities
- Eligible foreign tax credits increasing total tax credits
- Corrections to tax calculations or payment records
Before pursuing recovery, companies should first establish where the overpayment originated and whether the amount is fully supportable.
Where income tax refund problems usually arise
The amount reported as overpaid is not necessarily the amount DJP will ultimately accept or refund.
Problems commonly arise when tax returns, tax credits, payment records, and accounting records do not fully align. Companies should pay particular attention to:
- PPh 22 and PPh 23 credits that cannot be validated
- PPh 25 payments that do not reconcile with the amount claimed
- Foreign tax credits without sufficient supporting evidence
- Unsupported fiscal adjustments
- Differences between accounting records and the Annual Income Tax Return
- Outstanding tax debts that may reduce the amount ultimately returned
For preliminary refunds, PMK 28/2026 requires DJP to review evidence of relevant PPh withholding, collection, and payment. Credits that don’t meet the required validation conditions are not included in the preliminary refund calculation.
This makes reconciliation particularly important before a company requests recovery, helping to prevent delays and ensuring a smoother process.
Can income tax overpayment be credited or refunded?
The correct treatment depends on how overpayment arose.
| Type of Overpayment | What You Can Do | What It Means |
| Annual Corporate Income Tax Overpayment | Request a regular refund or preliminary refund, if eligible | The company asks DJP to return the excess tax paid. |
| Excess PPh 25 After Recalculation | Request a refund or credit it in the Annual Income Tax Return | The excess can be returned or used as a tax credit in the annual tax calculation. |
| Use It for the Next PPh 25 Payment | Not automatically allowed | The excess should not simply be carried forward to the next monthly instalment. |
PER-11/PJ/2025 provides the refund-or-credit treatment where PPh 25 instalments become excessive following recalculation under the circumstances governed by the regulation. It should therefore not be treated as a general alternative for every corporate income tax overpayment.
Which income tax refund route applies in 2026?
Companies seeking an annual income tax refund generally follow either regular restitution or, if eligible, a preliminary refund.
Regular restitution
If a company does not use or qualify for a preliminary refund, the DJP processes regular restitution through an examination. The examination can take up to 12 months after the DJP receives the complete refund request.
Preliminary refund
Under PMK 28/2026, qualifying taxpayers can access a shorter review process.
- Taxpayers with certain criteria: Decision within up to 3 months for income tax
- Qualifying corporate taxpayers meeting certain requirements: Decision within up to 1 month
For the latter corporate category, the Annual Income Tax Return must show annual turnover above IDR 0 and up to IDR 50 billion, with an overpayment of no more than IDR 1 billion.
A preliminary refund can accelerate recovery, but it doesn’t close the tax period from further scrutiny. DJP may subsequently conduct an examination and issue a tax assessment based on the results.
What businesses need to get right before filing
A refund request should start with the underlying tax position, not simply the overpaid amount shown in the Annual Income Tax Return.
Confirm the overpayment
Reconcile the annual income tax calculation against tax payments, withholding credits, fiscal adjustments, and accounting records.
Identify the right treatment
Determine whether the amount represents an annual corporate income tax overpayment or a specific PPh 25 excess arising from recalculation.
Assess preliminary refund eligibility
Check whether the company meets the requirements under PMK 28/2026 before choosing between regular restitution and preliminary refund.
Validate supporting evidence
Ensure withholding evidence, tax-payment records, financial statements, fiscal calculations, and underlying transactions support the claimed amount.
Check outstanding tax liabilities
Apply an approved tax overpayment against outstanding tax debt before returning the remaining amount. Companies should therefore assess the expected net cash recovery, not only the reported overpayment.
What are the risks if an income tax overpayment is mismanaged?
An incorrect or poorly supported refund position can create issues beyond delayed cash recovery. Companies may face:
- A lower refundable amount if tax credits cannot be validated
- Longer reviews due to inconsistencies in tax and accounting records
- Additional documentation or clarification requests
- Tax adjustments identified during examination
- An underpayment position if the examination produces adjustments exceeding the claimed overpayment
- Cash remaining tied up while the position is being resolved
For companies using preliminary repayment, a faster initial refund should therefore not replace proper tax reconciliation and examination readiness.
Insights into Corporate Income Tax in Indonesia
Recover your income tax overpayment with Ascentium Indonesia
Recovering income tax overpayment is not simply about submitting a refund request. Companies need to confirm the amount claimed, choose the right recovery route, and ensure the tax position can withstand DJP review.
Ascentium Indonesia supports businesses with our comprehensive tax compliance services:
- Income tax overpayment assessment and reconciliation
- Regular and preliminary refund eligibility assessment
- Tax credit and supporting document review
- Refund preparation and submission support
- Assistance during DJP review or tax examination
If your company has an overpaid income tax position, talk to our tax experts to assess the appropriate recovery route before filing.
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Frequently Asked Questions
Why does my company have an income tax overpayment?
An overpayment can arise when tax payments and eligible credits exceed the company's final income tax liability. Common causes include excessive PPh 25 instalments, substantial PPh 22 or PPh 23 credits, foreign tax credits, or lower final taxable income.
Can my company get an income tax overpayment refunded?
Yes. An annual corporate income tax overpayment can generally be recovered through regular restitution or, where the requirements are met, a preliminary refund.
Can an income tax overpayment be credited instead of refunded?
Only in specific circumstances. PER-11/PJ/2025 allows certain excess PPh 25 instalments arising from recalculation to be credited in the Annual Income Tax Return or requested back as tax that should not have been due.
Can excess PPh 25 automatically be used for the next month's instalment?
PER-11/PJ/2025 does not establish an automatic next-month offset. It provides for qualifying excess PPh 25 to be refunded or credited in the Annual Income Tax Return.
How long can a regular income tax refund take?
Regular restitution is processed through examination, which can take up to 12 months after the tax office receives a complete refund request.
How fast is a preliminary income tax refund under PMK 28/2026?
For taxpayers with certain criteria, the income tax preliminary refund decision can take up to 3 months. For qualifying corporate taxpayers meeting the specific requirements under Article 9, the timeframe is up to 1 month.
Which companies can qualify for the one-month preliminary refund?
Under PMK 28/2026, one relevant corporate category covers taxpayers filing an overpaid Annual Income Tax Return with annual turnover above IDR 0 and up to IDR 50 billion, and an overpayment of no more than IDR 1 billion.
Can DJP examine the company after a preliminary refund has been paid?
Yes. PMK 28/2026 allows DJP to subsequently examine taxpayers that have received a preliminary refund and issue a tax assessment based on the examination results.
What should companies review before requesting an income tax refund?
Companies should reconcile the Annual Income Tax Return, tax payments, withholding credits, fiscal adjustments, accounting records, foreign tax credits, and supporting transaction documents before filing.
How can Ascentium Indonesia help with an income tax overpayment?
Ascentium Indonesia can assess the overpaid position, determine the appropriate recovery route, reconcile tax credits and supporting records, prepare the refund submission, and assist during DJP review or examination.
Get in touch with us.
What you'll get
A prompt response to your inquiry
Knowledge for doing business from local experts
Ongoing support for your business
Disclaimer
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Verified by
Heldy Narua
Senior External Finance Manager at InCorp Indonesia
Heldy, with seven years of experience, leads InCorp Indonesia’s External Finance team, specializing in reliable Payroll Outsourcing and Finance Management solutions. She has an Accounting and Business Administration degree from Sampoerna University and Oregon State University. She is certified with Brevet AB, highlighting her technical expertise and commitment to client success.
