Great News! DGT Nullifies Administrative Tax Penalties up to 100%

JAKARTA, DDTCNews – Director General of Taxes, Bimo Wijayanto, has introduced a policy for the reduction or nullification of administrative tax penalties through the Director General of Taxes Decree No. KEP-239/PJ/2026.

The decree, which took effect on 8 October 2026, has been issued to improve taxpayer compliance and stimulate the national economy. This policy also follows up on Article 27A of the Minister of Finance Regulation (MoF Reg.) 118/2024, as amended by MoF Reg. 71/2026.

"To improve taxpayers' compliance, stimulate the national economy and to implement Article 27A of MoF Reg. 118/2024, as amended by MoF Reg. 71/2026, tax policies in connection with the reduction or nullification of administrative penalties are required," reads one of the considering section of KEP-239/PJ/2026, as cited on Monday (12/10/2026).

Under KEP-239/PJ/2026, the policy on the reduction or nullification of penalties applies to the late filing of Annual Income Tax Returns (up to the 2025 tax year) and Periodic Tax Returns (up to the September 2026 taxable period) with an underpayment status.

This policy also applies to voluntary amendments of tax returns as well as late payment or tax remittance of tax payable. In addition, incentives are also provided for administrative penalties stated in a notice of tax assessment (surat ketetapan pajak/SKP in Indonesian), a notice of land and building tax (L&B Tax) assessment or a notice of tax collection (surat tagihan pajak/STP in Indonesian).

Penalties arising from audit findings relating to assets that were not disclosed or were insufficiently disclosed, under the Voluntary Disclosure Programme (Program Pengungkapan Sukarela/PPS in Indonesian) pursuant to MoF Reg. 196/PMK.03/2021 may also be eligible for a reduction in penalties.

In general, the level of reduction or nullification of penalties granted varies depending on the type of penalty and the time at which the tax obligation is fulfilled. Indeed, taxpayers may obtain a reduction or nullification of administrative penalties of up to 100%, provided they meet the prescribed requirements.

For example, incentives for penalties arising from the late filing of: (i) Annual Income Tax Returns for tax years up to and including 2025 with an underpayment status; and/or (ii) Periodic Tax Returns for taxable periods up to and including September 2026 with an underpayment status, are granted as follows:

• 100% nullification: Granted where the tax return is filed during the period between 8 October 2026 and 31 December 2026;
• 50% reduction: Granted where the tax return is filed during the period between 1 January 2027 and 31 March 2027; and
• 25% reduction: Granted where the tax return is filed during the period between 1 April 2027 and 30 June 2027.

Details of the types of administrative penalties and the level of reduction granted are set out in the appendix KEP-239/PJ/2026. To benefit from these facilities, taxpayers must apply for the reduction or nullification of administrative penalties to the Directorate General of Taxes (DGT) no later than 1 October 2028.

To submit such an application, taxpayers must satisfy a number of requirements as set out in Article 23 and Article 24 of MoF Reg. 118/2024, as amended by MoF Reg. 71/2026. In addition, taxpayers submitting such an application must fulfil the following requirements:

• Not having filed a lawsuit and/or other legal remedies. This must be evidenced by attaching a statement letter declaring that no lawsuit and/or other legal remedies have been filed;
• Having filed a lawsuit and/or other legal remedies, but having since withdrawn them. This must be evidenced by attaching an application letter for the withdrawal of the lawsuit and/or other legal remedies;
• Submitting a duly stamped statement letter declaring that the administrative penalty arose due to negligence or not through the taxpayer's wilful misconduct; and
• The reduction or nullification of administrative penalties is granted only in respect of administrative penalties that have not yet been paid or settled by the taxpayer. (rig)