Indonesia Tax Penalties Can Be Reduced: Who Qualifies?

Taxpayers with administrative penalties can apply for a reduction or cancellation under Indonesia’s KEP-239/PJ/2026 policy. For certain eligible cases, relief can reach 100% if the relevant obligations are fulfilled between October 8 and December 31, 2026.

The same treatment does not apply to every tax bill. Eligibility depends on the type of violation, the status of the tax return, payment timing, and the document issued by the Directorate General of Taxes, or DJP. Some categories follow a different structure that requires part of the penalty to be paid before the remainder can be reduced.

The distinction between tax principal and administrative penalties matters. The policy concerns qualifying penalties. Outstanding principal tax must still be settled in accordance with the applicable rules.

What Is the Legal Basis?

The policy is linked to Minister of Finance Regulation No. 71 of 2026, which amends Regulation No. 118 of 2024 on procedures for correction, objection, reduction, cancellation, and related tax matters. The detailed penalty-relief policy was subsequently set out in KEP-239/PJ/2026.

DJP says the measure is intended to encourage taxpayers to settle their obligations and provide greater certainty. Its official explanation describes how the level of relief for certain categories declines over time.

Applications remain subject to formal and substantive requirements. The headline figure should therefore be understood as up to 100% relief for qualifying penalties, rather than an automatic cancellation of every tax bill.

DJP’s explanation of phased administrative penalty relief for qualifying categories. Source: Directorate General of Taxes, October 22, 2026.

Who May Qualify?

The policy is not limited to one type of taxpayer. Individuals and businesses need to determine whether their specific penalty and tax document fall within an eligible category.

A. Taxpayers Who Filed a Return Late

One category covers penalties for late submission of annual income tax returns through the 2025 tax year or periodic returns through the September 2026 tax period.

The policy discussed here includes returns with an underpayment status and requires the relevant obligations to be fulfilled within the specified period. Taxpayers should check the status of their return and the rules for their category. A nil or overpayment return should not automatically be assumed to receive the same treatment.

B. Taxpayers Who Amend a Return

A voluntary amendment can reveal additional tax payable and give rise to administrative penalties. Those penalties may fall within the policy if the amendment and payment meet the applicable requirements.

For example, a taxpayer might discover that income was omitted from an earlier return and that the amended return shows an underpayment. The potential relief depends on when the obligations are fulfilled and whether the case qualifies, not simply on the decision to amend.

C. Taxpayers with Assessments or Collection Notices

Certain penalties stated in tax assessment letters or collection notices are also covered, including specified land and building tax cases. The applicable rules can differ according to when the document was issued, whether an objection has been filed, and which payments must be settled.

An assessment or collection notice issued before the policy began does not necessarily exclude the taxpayer. However, the relief rate for an older document may differ from the rate applicable to a newly filed return.

When Can Relief Reach 100%?

For certain underpaid tax returns that are filed or amended, the DJP penalty-relief page lists the following stages:

• October 8–December 31, 2026: up to 100% penalty relief.

• January 1–March 31, 2027: up to 50% penalty relief.

• April 1–June 30, 2027: up to 25% penalty relief.

These periods concern the relevant filing, amendment, or payment obligation for the applicable category. The deadline to submit a relief application must be distinguished from the deadlines for the actions that determine the relief percentage.

Penalty-relief rates for certain filings or amendments of underpaid tax returns. Source: Directorate General of Taxes, Administrative Penalty Relief page, accessed October 27, 2026.

Example: Separating Principal Tax from Penalties

Suppose a taxpayer amends a 2025 tax return and receives the following calculation:

• Underpaid principal tax: Rp10 million.

• Administrative penalty within an eligible category: Rp1 million.

If all requirements are met and DJP approves 100% relief, the Rp1 million penalty may be cancelled. The Rp10 million principal tax remains payable under the applicable rules.

If the same case qualifies for 50% relief, the Rp1 million penalty would illustratively fall to Rp500,000. This example simplifies the calculation. The actual outcome depends on the type of penalty, payment status, filing date, and DJP’s decision.

Why Do Some Cases Use 90% and 75%?

Not every category follows the same timetable. DJP also lists cases in which a taxpayer must pay part of an administrative penalty before the remaining portion can be reduced.

For a qualifying category, paying 10% of the penalty within the relevant period can be associated with 90% relief. Another applicable category may require payment of 25% and provide 75% relief, subject to its own conditions and deadlines.

This is why two taxpayers with penalties of the same nominal amount may receive different treatment. The issue date of the notice, the type of penalty, and whether principal tax has already been paid must be checked first.

How Can Taxpayers Apply?

Relief is not granted simply because a taxpayer meets a payment deadline. An application must be submitted to DJP and assessed under the applicable rules. KEP-239/PJ/2026 sets October 1, 2028 as the latest date for submitting an application, while the actions that determine the relief rate have separate deadlines.

Before applying, taxpayers should review:

• The tax return, assessment, or collection notice that gave rise to the penalty.

• The type and amount of the penalty and the status of principal tax payments.

• Filing, amendment, payment, and document issue dates.

• The relevant category, including settlement and application requirements.

• Any objection or other legal proceedings that could affect eligibility.

Some applications may be submitted through DJP services, including Coretax where the relevant facility is available. Taxpayers involved in a dispute should understand the consequences of their options before taking action. A tax officer or qualified adviser can help assess the facts of the individual case.

Which Deadline Matters Next?

December 31, 2026 is a significant date for taxpayers who fall within a category eligible for up to 100% relief during the first period. Fulfilling the obligation later may result in a different percentage, depending on the applicable category.

The practical starting point is to match each assessment or notice with the correct rule. Taxpayers should separate two figures: the principal tax that must be settled and the penalty for which relief may be requested.

Disclaimer: This article is for information only and does not constitute tax advice. Eligibility depends on the penalty type, documents, timing, application requirements, and DJP’s decision. Consult the official rules or a qualified adviser about your circumstances.