DGT Nullifies Tax Penalties up to 100%: Conditions & Deadlines

JAKARTA, DDTCNews - The Directorate General of Taxes (DGT) is providing facilities in the form of the reduction or nullification of administrative tax penalties of up to 100% through the Director General of Taxes Decree No. KEP-239/PJ/2026. This topic is one of the topics reviewed by the national media today, Tuesday (13/10/2026).

KEP-239/PJ/2026 has been issued to improve taxpayer compliance and stimulate the national economy and has been in effect since 8 October 2026. This policy is also a follow-up to Article 27A of Minister of Finance Regulation (MoF Reg.) 118/2024, as amended by MoF Reg. 71/2026.

Under KEP-239/PJ/2026, the reduction or nullification of penalties applies to the delay in the filing of the annual individual/corporate income tax return (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 amendment of tax returns as well as late payment or remittance of tax payable. In addition, incentives are also available in respect of administrative penalties stated in a notice of tax assessment (surat ketetapan pajak/SKP in Indonesian), 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 in respect of assets that were not disclosed or were under-disclosed under the voluntary disclosures programme (program pengungkapan sukarela/PPS in Indonesian) pursuant to MoF Reg. 196/2021 may also benefit from a penalty reduction.

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

For example, the incentive for penalties arising from the delay in the fiing of the annual income tax return for tax years up to and including 2025 with an underpayment status; and/or periodic tax returns for taxable periods up to and including September 2026 with an underpayment status, shall be granted as follows:

• A 100% nullification is granted if the tax return is filed during the period from 8 October 2026 to 31 December 2026;
• A 50% reduction is granted if the tax return is filed during the period from 1 January 2027 to 31 March 2027; and
• A 25% reduction is granted if the tax return is filed during the period from 1 April 2027 to 30 June 2027.

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

To submit such an application, taxpayers must satisfy a number of requirements 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.

In addition to the above news, there is a review of plans to expand the number of VAT collection agents through the tax collection system for cross-border digital transactions (sistem pemungutan pajak atas transaksi digital luar negeri/SPP-TDLN in Indonesian) scheme. Further, there is also a discussion of the International Monetary Fund (IMF) encouraging jurisdictions to reduce distortions caused by tax policy on the economy.

Below is a full review of the tax articles.

DGT: Penalty Reduction Is Not a Tax Amnesty

The DGT has affirmed that the facilities in the form of the nullification or reduction of administrative tax penalties as regulated under MoF Reg. 71/2026 do not constitute a tax amnesty policy. Director General of Taxes, Bimo Wijayanto, explained that he facilities in the form of the reduction or nullification of administrative penalties will be granted provided taxpayers fulfil the applicable requirements and conditions.

"The refinement of these provisions does not constitute a tax amnesty policy and does not extinguish the obligation to settle the principal tax liability," he said.

One of the key changes under MoF Reg. 71/2026 is the adjustment to the mechanism for paying tax liabilities. Under the previous rules, payments made by taxpayers were allocated proportionally between the principal tax liability and administrative penalties. Under MoF Reg. 71/2026, however, payments will first be set off to settle the principal tax liability. (DDTCNews, Kontan, Bisnis Indonesia)

DGT to Expand VAT Collection Agents via SPP-TDLN Scheme

The DGT will again appoint banks, financial technology (fintech) companies and payment gateway providers as VAT collection agents through the tax collection system for cross-border digital transactions (sistem pemungutan pajak atas transaksi digital luar negeri/SPP-TDLN in Indonesian) scheme.

Bimo stated that currently, 6 parties are involved in VAT collection through the SPP-TDLN. Going forward, the number of parties appointed by the DGT will increase in line with the growing consumption of digital data and transactions relating to streaming services, artificial intelligence (AI) subscriptions and games from overseas.

The SPP-TDLN is a technology-based VAT collection mechanism applicable to the utilisation of digital goods and/or digital services from overseas in Indonesia that fulfil the prescribed conditions. The procedures for collecting VAT through this mechanism is governed by MoF Reg. 49/2026. (DDTCNews)

IMF Urges Jurisdictions to Reduce Distortive Tax Policies

The IMF, through its October 2026 edition of the Fiscal Monitor, is encouraging jurisdictions to reduce distortions caused by tax policy on the economy. In a chapter entitled Taxing Better to Boost Growth, the IMF emphasises that the manner in which governments raise revenue is just as important as the amount of revenue collected.

Two different tax systems may generate equivalent revenue whilst having vastly different impacts on productivity, investment and employment. Jurisdictions therefore need to design policies with minimal distortion.

"Taxing better means addressing these distortions and improving efficiency, that is, raising the same amount of revenue with the same tax mix, but with less interference in real economic decisions," the IMF wrote. (DDTCNews)

Authors' Royalty Final Tax Cut to 1.5%, Gov. Reg. Due in November

The government is targeting the draft government regulation on the final income tax incentive on royalties for authors to be enacted in November 2026.

Minister of Creative Economy, Teuku Riefky Harsya, stated that the draft government regulation is currently in the harmonisation stage. Through this policy, the final income tax rate on authors' royalties will be reduced from 15% to 1.5%.

"At present, [the draft government regulation] is in the process of harmonisation. We hope that before the end of the year, or perhaps in November, the draft government regulation can be enacted," he said. (Antara, Kompas.com)

Plastic Import Duty Cut to 0% for 6 Months

The government has officially implemented a 0% import duty tariff on imports of certain plastic raw materials. This policy is regulated under MoF Reg. 68/2026 as the fourth amendment to MoF Reg. 26/2022.

The imposition of a 0% import duty tariff constitutes an incentive to support the competitiveness of the downstream plastics industry amidst rising global plastic prices.

Through this ministerial regulation, the government inserts Article 4B into MoF Reg. 26/2022. This Article regulates the granting of a 0% import duty tariff on imports of plastic materials covered under 6 HS codes. (DDTCNews) (dik)