DGT on Nullification of Proportional Principal and Penalty Calculation
JAKARTA, DDTCNews - The Directorate General of Taxes (DGT) has explained the background to the enactment of MoF Reg. 71/2026, which removes the provisions on proportional calculation of tax principal and penalties for taxpayers wishing to apply for the nullification or reduction of penalties.
The DGT Director of Tax Objection and Appeal, Etty Rachmiyanthi, stated that the proportional calculation of tax principal and penalties under the previous regulation, namely MoF Reg. 118/2024, had, in fact, caused difficulties in practice, both for taxpayers and tax officers at tax offices (kantor pelayanan pajak/KPP in Indonesian).
"In practice, colleagues in the field were persuading taxpayers to pay the principal first, and then the penalties. However, when a taxpayer applies for reduction or nullification of penalties, it turns out that the payment is proportionalised when submitted," she said on Wednesday (28/10/2026).
Under Article 23 paragraph (6) of MoF Reg. 118/2024, it is affirmed that payments of a notice of tax assessment (surat ketetapan pajak/SKP in Indonesian) and notice of tax collection (surat tagihan pajak/STP in Indonesian) prior to an application for the reduction or nullification of penalties are to be allocated proportionally as payments towards the underpaid tax and penalties.
"This runs counter to our colleagues in collections, who actively encourage taxpayers to make payment, only for us to then proportionalise it when legal remedies are pursued," said Etty.
Through MoF Reg. 71/2026, Article 23 paragraph (6) has been revised so that payments for SKPs and STPs are first set off against the amount of underpaid tax. If the payment made by the taxpayer exceeds the amount of the underpayment, the excess is subsequently applied against the penalties.
According to Etty, the norm set out in MoF Reg. 71/2026 is the same as the norm formerly applied under MoF Reg. 8/2013. "The proportional provision in MoF Reg. 118/2024 was a new rule. In response to feedback from colleagues in the field indicating it was making it more difficult to obtain penalty reductions, we have reverted to the norm under MoF Reg. 8/2013," she explained.
As an example, KPP X issues a notice of tax underpayment assessment (surat ketetapan pajak kurang bayar/SKPKB in Indonesian) of IDR140 million against Mr A. The SKPKB comprises a tax principal of IDR100 million and a penalty of IDR40 million. Mr A pays IDR100 million towards the principal of the SKPKB on 1 February 2026, and then applies for penalty reduction on 3 February 2026.
In this case, the payment made on 1 February 2026 is treated as payment of the tax principal in the SKPKB. Accordingly, the administrative penalty eligible for reduction amounts to IDR40 million.
The change to the mechanism for calculating principal and penalties through MoF Reg. 71/2026 is viewed as providing convenience for taxpayers to obtain a nullification or reduction of penalties, including nullifications and reductions now granted via KEP-239/PJ/2026.
Taxpayers need only settle the tax principal and then apply for a nullification or reduction of penalties according to the criteria set out in KEP-239/PJ/2026, together with Article 23 and Article 24 of MoF Reg. 118/2024, as amended by MoF Reg. 71/2026. (rig)