Indonesia fiscal management and tax regulation updates

Indonesia is managing significant fiscal shifts involving tax revenue collection and new regulatory frameworks for debt settlement. As of late September 2026, the Directorate General of Taxes (DJP) had reached 68.2% of its annual tax revenue target, totaling Rp1,607 trillion, with efforts focused on optimizing data for supervision and implementing new collection methods for digital transactions.

To support taxpayers, specifically Micro, Small, and Medium Enterprises (MSMEs), the Ministry of Finance implemented Regulation (PMK) No. 71/2026, effective October 2, 2026. This policy changes the settlement mechanism by prioritizing the repayment of principal tax debt over administrative sanctions. Previously, payments were applied proportionally between the principal and sanctions. This shift is intended to help MSMEs manage cash flow more effectively while settling core obligations.

The regulation allows the DJP to reduce or waive up to 100% of administrative tax sanctions and Land and Building Tax (PBB) fines, including those related to late annual tax return (SPT) filings. Director General of Taxes Bimo Wijayanto noted that this is not a “tax amnesty or a total debt cancellation,” but rather a measure to provide greater flexibility for compliance. 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.