The Directorate General of Taxes (DGT) reported that as of April 30, 2026, a total of 13,056,881 taxpayers have filed their annual tax returns (SPT), comprising both individual taxpayers and corporate taxpayers. From the target of 19.05 million tax returns, the formal compliance rate reached 68.54%. Consequently, some taxpayers have not fulfilled their annual tax return filing obligations and may face administrative sanctions.
In April 2026, the DGT issued KEP-71/PJ/2026 on the waiver of administrative sanctions for late filing of the Corporate Annual Income Tax Return and payment of Article 29 Income Tax for the 2025 tax year. The waiver of sanctions is granted provided that the obligations are fulfilled no later than one month after the due date. For taxpayers with a financial year ending on December 31, the relaxation period ends on May 31, 2026.
The end of this relaxation period is one reason taxpayers should understand the types and provisions of tax administrative sanctions.
Legal Basis and Function of Sanctions
Tax administrative sanctions are primarily regulated under Law Number 6 of 1983 concerning General Provisions and Procedures of Taxation, as amended several times, most recently through Law Number 6 of 2023 concerning the Stipulation of Government Regulation in Lieu of Law Number 2 of 2022 concerning Job Creation (Ketentuan Umum dan Tata Cara Perpajakan/KUP Law).
In the self-assessment system, administrative sanctions function to encourage taxpayer compliance in fulfilling formal and material tax obligations. These sanctions differ from criminal sanctions because they are imposed through tax administrative mechanisms.
Generally, tax administrative sanctions consist of three types: fines, interest, and surcharges. Each has different bases for imposition, amounts, and calculation mechanisms.
Fines for Late Filing of Tax Returns
Article 7 of the KUP Law stipulates fines for the late filing of tax returns in specific nominal amounts, rather than a percentage. The fine amount for the late filing of a Value Added Tax (VAT) Periodic Tax Return (SPT Masa PPN) is IDR 500,000, while for other Periodic Tax Returns it is IDR 100,000. For annual income tax returns, the late filing fine is IDR 100,000 for individual taxpayers and IDR 1,000,000 for corporate taxpayers.
Fines are imposed on the late filing of a tax return, regardless of whether there is any tax underpayment. Therefore, a nil tax return can still be subject to a fine if filed after the reporting deadline.
Interest Charges
Interest charges are imposed under various conditions, including voluntary amendments of tax returns resulting in underpaid tax, late payment or deposit of tax, tax audit results, voluntary disclosure of untruthful filling of a tax return, and late settlement of tax debts.
The calculation of interest charges is based on the amount of tax that serves as the basis of imposition, the monthly interest rate determined by the Minister of Finance, and the imposition period. For provisions that strictly limit the imposition period, the maximum limit is generally 24 months.
Several conditions that give rise to interest charges are regulated as follows:
1. Voluntary Amendment of Tax Return
Article 8 paragraph (2) of the KUP Law regulates the imposition of interest if a voluntary amendment of an annual tax return results in an increase in the amount of tax payable.
The interest is calculated on the amount of underpaid tax, starting from the end of the deadline for filing the annual tax return up to the payment date. The maximum interest imposition period is 24 months, with any fraction of a month counted as one full month.
2. Late Payment or Deposit of Tax
Article 9 paragraph (2a) of the KUP Law regulates the imposition of interest on tax payments or deposits made after the due date.
The interest is calculated from the end of the due date up to the payment date, for a maximum of 24 months. This interest sanction provision also applies to the amount of tax that is unpaid or underpaid in connection with an installment agreement or postponement of payment as regulated in the KUP Law.
3. Audit Results
Article 13 paragraph (2) of the KUP Law regulates the imposition of interest if, based on tax audit results, there is unpaid or underpaid tax. Under such conditions, the DGT may issue a Notice of Tax Underpayment Assessment (Surat Ketetapan Pajak Kurang Bayar/SKPKB) which includes administrative sanctions in the form of interest.
4. Disclosure of Untruthful Completion of Tax Returns During an Audit
Article 8 paragraph (4) of the KUP Law provides an opportunity for taxpayers to disclose any untruthful completion of a tax return while an audit is in progress.
The disclosure is made through a separate report, provided the DGT has not yet submitted a notice of tax audit results. For this disclosure, the taxpayer is subject to administrative sanctions in accordance with the applicable provisions.
Surcharges
Unlike interest charges, which are calculated based on a monthly rate and the imposition period, surcharge sanctions are set at a specific percentage of the imposition basis as regulated by law.
Article 13 paragraph (3) of the KUP Law regulates surcharge sanctions in the issuance of an SKPKB for specific conditions. One of them is a 75% surcharge on unpaid or underpaid VAT and Luxury Goods Sales Tax (PPnBM), as well as Income Tax (PPh) that has been withheld or collected but is not deposited or is under-deposited.
In VAT and Luxury Goods Sales Tax audits, applying administrative sanction provisions requires considering the relevant conditions and legal bases, as provisions on interest and surcharges may both relate to the tax obligations being audited.
In addition, a surcharge sanction may be imposed in the issuance of a Notice of Additional Tax Underpayment Assessment (Surat Ketetapan Pajak Kurang Bayar Tambahan/SKPKBT) based on new data, including data that was previously undisclosed. In this case, the amount of underpaid tax is increased by a 100% surcharge in accordance with the applicable provisions.
Sanctions in the Tax Dispute Process
Administrative sanctions may also be imposed during the tax dispute resolution process, specifically at the objection and appeal stages.
Article 25 paragraph (9) of the KUP Law and Article 34 of Government Regulation (Peraturan Pemerintah/PP) Number 50 of 2022 stipulate a fine of 30% if the taxpayer's objection request is rejected or partially granted.
At the appeal level, Article 27 paragraph (5d) of the KUP Law and Article 35 of PP Number 50 of 2022 stipulate a fine of 60% if the appeal decision rejects or partially grants the taxpayer's request, or increases the amount of tax payable.
The basis for calculating this fine is the tax amount based on the appeal decision minus the tax that has been paid before filing the objection.
Administrative Sanctions in the Termination of Investigation
Administrative sanctions are also related to the criminal tax law enforcement process. Article 44B of the KUP Law, along with its implementing provisions in PP Number 50 of 2022, regulates the possibility of terminating an investigation for the interest of state revenue.
This provision provides a mechanism to settle criminal tax cases through payment of certain obligations, in accordance with the requirements and procedures stipulated in laws and regulations.
Reduction and Waiver of Sanctions
Administrative sanctions are not always final. Article 36 of the KUP Law, as well as Articles 38 and 39 of PP Number 50 of 2022, grant the Director General of Taxes the authority, either ex officio or upon the taxpayer's request, to reduce or waive outstanding administrative sanctions in the form of interest, fines, and surcharges.
This facility may be granted if the sanctions are imposed due to the taxpayer's oversight or through no fault of their own. The application for reduction or waiver must still meet the requirements and procedures stipulated in the laws and regulations.
Based on PP Number 50 of 2022, an application for the reduction or waiver of administrative sanctions may be submitted at most twice.
Conclusion
Tax administrative sanctions consist of fines, interest, and surcharges. Each type of sanction has a different legal basis, imposition condition, amount, and calculation mechanism. Sanctions may also arise during the audit process, dispute resolution, and up to criminal tax law enforcement.
An understanding of these provisions is necessary so that taxpayers can fulfill their tax obligations and manage compliance risks. Voluntary amendment of Tax Returns, timely payment of taxes, and utilization of the sanction reduction or waiver mechanisms in accordance with the provisions are steps that can be taken to prevent or mitigate tax administrative consequences.
Legal References
- Law Number 6 of 1983 concerning General Provisions and Procedures of Taxation as amended several times, most recently by Law Number 6 of 2023.
- Law Number 7 of 2021 concerning Harmonization of Tax Regulations.
- Government Regulation Number 50 of 2022 concerning Procedures for Exercising Tax Rights and Fulfilling Tax Obligations.
- Minister of Finance Regulation Number 118 of 2024 concerning Procedures for Correction, Objection, Reduction, Waiver, and Cancellation in the Field of Taxation.
- Minister of Finance Regulation Number 71 of 2026 concerning Amendment to the Minister of Finance Regulation Number 118 of 2024 concerning Procedures for Correction, Objection, Reduction, Waiver, and Cancellation in the Field of Taxation.
- Director General of Taxes Decree Number KEP-71/PJ/2026 concerning Tax Policy Regarding the Implementation of the Core Tax Administration System in the Context of Filing the 2025 Tax Year Corporate Annual Income Tax Return.
- Director General of Taxes Decree Number KEP-239/PJ/2026 concerning Tax Policy Regarding the Reduction or Waiver of Administrative Sanctions.
Also Read:
PPS Participants Can Get Tax Penalty Reductions Up to 100%
Guide to Applying for Tax Penalty Reduction or Cancellation Through Coretax DGT
Understanding Tax Collection: Procedures, Penalties, and Resolution
Writer: Ideatax | Editor: Thomas Rizal