Rates of Fine Penalties of Local Taxes Now Vary, Here’s Why

JAKARTA, DDTCNews – The amount of interest administrative penalties under the provisions on local taxes will vary from 0.6% to 2.2% starting next year, no longer set at 2% as currently applicable.

Head of the Development of Local Taxes and Local Charges Potential Developments Subdirectorate of the Directorate General of Fiscal Balance (DJPK) Fadliya states that fine penalties are designed to vary based on the type of violation to increase voluntary tax compliance.

“This is something new in Gov. Reg. 35/2023. We actually applied this based on the practice under the provisions on central taxes,” she said in the dissemination of Gov. Reg. 35/2023 concerning General Provisions on Local Taxes and Local Charges, Thursday (6/7/2023).

In addition to increasing compliance, continued Fadliya, the variation in fine penalties is expected to support ease of doing business in line with lower penalties for relatively minor violations.

Amount of Penalties for Each Violation

In further detail, taxpayers that receive instalment or deferral of tax payable incentives from the local governments are subject to interest of 0.6% per month on the amount of tax due.

Further, taxpayers that do not pay or remit local tax payable on time will be subject to a fine penalty of 1% per month of the unpaid or underpaid tax payable.

Next, the rectification of Local Tax Returns (SPTPD) which state underpayment is also subject to a fine penalty of 1% per month of the amount of tax underpayment calculated from the payment due date until the payment date.

Further, if the local governments verify Local Tax Returns and an underpayment is discovered, the taxpayer will be subject to a penalty in the form of interest of 1% per month on the amount of tax underpayment.

If the local governments audit and issue a Notice of Local Tax Underpayment Assessment (SKPDKB), a fine penalty of 1.8% of the tax underpayment is imposed calculated from the time the tax is due or the end of a taxable period, a fraction of the tax year or tax year until the Notice of Local Tax Underpayment Assessment is issued.

If the local governments calculate taxes ex officio and issues a Notice of Local Tax Underpayment Assessment because a taxpayer does not file Local Tax Returns, does not maintain bookkeeping or does not show documents when audited, a penalty of 2.2% plus a surcharge of 25% shall be imposed.

Specifically for Motor Vehicle Fuel Tax (PBBKB) and taxes on certain goods and services, the penalty is in the form of a surcharge of 50%. (rig)