Indonesia tax authority reforms debt payment and sanction rules

The Indonesian Directorate General of Taxes (DJP) has implemented new regulations under Ministry of Finance Regulation (PMK) Number 71 of 2026 to reform tax debt payment mechanisms and administrative sanctions.

Under the new rules, effective since October 2, 2026, taxpayer payments will now prioritize the settlement of principal tax debt before administrative sanctions. Previously, payments were applied proportionally between the principal and sanctions. This change is intended to help taxpayers, particularly micro, small, and medium enterprises (MSMEs), manage their cash flow more effectively while settling core obligations.

Additionally, the regulation allows for the reduction or even 100 percent elimination of administrative sanctions. This facility applies to various categories, including late annual tax return (SPT) filings and certain tax bill sanctions. Director General of Taxes Bimo Wijayanto noted that while sanctions can be waived, the principal tax debt must still be paid in full. The potential value of administrative sanctions eligible for such reductions is estimated at approximately Rp 14.8 trillion.