Executive Summary
Indonesia advanced its OECD Pillar Two commitments through GIR and CbC MCAA signings, while mandating a full “Replace” scheme for CoreTax amended returns and rolling out PP 20/2026 ‘s’0.5% final income tax for UMKM. Regional tax offices intensified socialization of the PMK-71/2026 administrative penalty reduction program ahead of the December 31, 2026 deadline, and digital proxy rules were modernized to require e-signature authorization and prohibit sub-delegation.
Important Updates
OECD Pillar Two Global Minimum Tax & Automatic Exchange of Information (GIR/CbC MCAA)
Indonesia’s Director General of Taxes signed the GloBE Information Exchange Multilateral Competent Authority Agreement (GIR MCAA) on November 1, 2026, and the Country-by-Country (CbC) Reports MCAA on October 29, 2026, formalizing automatic information exchange under the OECD/G20 Inclusive Framework on BEPS. The domestic legal foundation rests on Law No. 7/2021 (UU HPP) Article 31A, Government Regulation in Lieu of Law No. 2/2022, and Minister of Finance Regulation PMK-136/2024. Indonesia has aligned with the Pillar Two timeline, with the Income Inclusion Rule (IIR) effective for fiscal years starting on or after January 1, 2024, and the Undertaxed Profits Rule (UTPR) for fiscal years starting on or after January 1, 2025.
Indonesia has adopted the full Pillar Two stack: the Qualified Domestic Minimum Top-up Tax (QDMTT), IIR, and UTPR, with Transitional Safe Harbors available for fiscal years 2025-2027. Multinational enterprise (MNE) groups with consolidated annual revenue exceeding EUR 750 million must file a GloBE Information Return (GIR) electronically via CoreTax within 15 months after fiscal year-end (18 months for the first reporting year), with top-up tax due concurrently. The DJP has established a dedicated Pillar Two Audit Unit; penalties for non-filing or incorrect GIR include IDR 1 million per day of delay (capped at IDR 100 million) plus a 50% penalty on underpaid top-up tax under Article 17 UU KUP.
The regime primarily affects inbound foreign MNEs benefiting from tax holidays, special economic zone incentives, or accelerated depreciation that depress effective tax rates below 15%, particularly in manufacturing, digital economy, renewable energy, and downstream mining. Indonesian-headquartered MNEs must assess IIR exposure on low-taxed foreign constituent entities. Compliance requires robust GloBE data consolidation, including financial accounting adjustments, covered taxes computation, substance-based income exclusion tracking (5% payroll plus tangible assets), and jurisdictional effective tax rate blending.
Sources: Indonesia Strengthens Global Tax Cooperation as Director General of Taxes Signs GIR MCAA | Indonesia Implements OECD Pillar Two Global Minimum Tax | East Jakarta Tax Office Holds GloBE Socialization | Indonesia Strengthens Global Tax Cooperation: Director General of Taxes Signs GIR MCAA | Director General of Taxes Signs GIR MCAA to Strengthen International Tax Information Exchange Cooperation
CoreTax “Replace” Scheme for Amended Tax Returns (SPT Pembetulan)
Director General of Taxes Regulation PER-12/PJ/2026, effective October 1, 2026, formally retired the previous “Delta” correction mechanism and introduced the “Replace” scheme within CoreTax. Under Replace, taxpayers submit a completely new tax return (SPT) that supersedes the previous filing in its entirety, rather than amending individual line items. Every Replace submission is instantly synchronized with the Taxpayer Ledger (Buku Besar Wajib Pajak), which serves as the single source of truth for the DJP’s risk engine, refund processing, and audit selection. The Replace function is available only before the DJP issues a formal assessment letter (SKP) or tax audit notification (SP2); once issued, the SPT is locked.
Complementing this, PER-15/2026 (effective August 1, 2026) moved all VAT Periodic Returns (SPT Masa PPN) and Annual Income Tax Returns (SPT Tahunan PPh) corrections exclusively to the Coretax “Koreksi SPT” menu, deprecating the legacy e-SPT Pembetulan desktop application. Corrections undergo real-time validation against e-Faktur, withholding slips (bukpot), and bank payment records, with automated computation of Article 9 and Article 17 penalties. Taxpayers intending to correct an SPT for tax periods ending on or after October 1, 2026 must use the Replace scheme; the practical window closes upon issuance of an SKP or SP2, subject to the general statute of limitations (five years standard, ten years for fraud).
The change affects all corporate and individual taxpayers registered in CoreTax. Tax consultants and accounting software providers must update integration modules to generate Replace-compliant SPT payloads. Non-compliance, including attempted Delta corrections post-October 1 or ledger synchronization failures, triggers administrative sanctions under Article 17 UU KUP, including a 1% per month interest penalty on resulting underpayments. Real-time ledger validation will reject any data mismatch, requiring manual resolution at the tax office.
Sources: Indonesia DJP Details CoreTax Replace Scheme Integration with Taxpayer Ledger | DJP and Pajakku Educate 1,054 Participants: SPT Corrections in CoreTax Now Use Fully Replace Schema | East Jakarta Tax Office Socializes New Rules on VAT and Annual Income Tax Return Corrections in Coretax | East Jakarta Tax Office Socializes New Rules on VAT and Annual Income Tax Return Corrections in CoreTax
PP 20/2026: 0.5% Final Income Tax for Micro, Small, and Medium Enterprises (UMKM)
Government Regulation (PP) No. 20 of 2026, effective January 1, 2026, supersedes PP 23/2018 and establishes a 0.5% final income tax (PPh Final) on gross turnover for eligible Micro, Small, and Medium Enterprises (UMKM) with annual revenue not exceeding IDR 500 million. The regime mandates CoreTax-based registration and reporting, with simplified turnover-based reporting that removes the option to use commercial bookkeeping. Taxpayers may elect out of the final regime into the standard corporate income tax system (22% on net income) by submitting a notification before the tax year begins.
The DJP conducted a national-scale seminar on November 3, 2026, and regional offices—including Kanwil DJP Aceh on November 2, 2026—deployed tax counselors across regencies to educate an estimated 1.2 million UMKM actors in Aceh alone, with materials translated into local languages. The UMKM National Data Platform enables automatic eligibility verification. Annual SPT submission deadlines are March 31 for individuals and April 30 for entities. The initiative supports the government’s “UMKM Naik Kelas” policy and directly affects an estimated 64 million UMKM actors nationwide.
Key compliance mechanics include mandatory NPWP registration via the CoreTax mobile app, monthly turnover recording, and integration with the UMKM Tax Clinic pilot in 50 KPPs offering walk-in and WhatsApp assistance. The 0.5% final tax provides a cash-flow advantage but requires meticulous turnover tracking to avoid unintentional threshold breaches, which would subject the taxpayer to standard progressive or corporate rates on entire income effective from the month the threshold is exceeded.
Sources: DJP Equips Business Actors with Digital Marketing Strategies and CoreTax SPT Filing Education to Drive UMKM Growth | Aceh Regional Tax Office Educates UMKM on PP 20/2026: New Rules for 0.5% Final Income Tax
Digital Tax Proxy & Tax Consultant Authorization Framework
Director General of Taxes Regulation PER-14/2026, effective September 15, 2026, replaces PER-24/2021 and modernizes the tax proxy regime with digital-first authorization exclusively through the DJP Online portal using e-Signature. Three proxy categories are defined: General Proxy for all tax obligations, Specific Proxy for single matters, and Litigation Proxy for Tax Court proceedings. Sub-delegation (proxy chaining) is expressly prohibited; each natural person acting must hold a direct proxy from the taxpayer. Taxpayers may revoke proxies instantly, terminating consultant access to Coretax dashboards, e-Faktur, and e-Bupot within one hour.
Minister of Finance Regulation PMK 18/PMK.03/2026 and PER-12/PJ/2026 introduce enhanced professional standards for tax consultants, including mandatory passage of the Tax Consultant Competency Test (UKKP), minimum two years of supervised experience, annual 20-hour Continuing Professional Education, and registration in the DJP’s Tax Professional Directory. Revised Power of Attorney formats require digital signature via CoreTax and explicit scope limitations. Disciplinary sanctions for violations range from written warnings to temporary suspension (6-24 months) or permanent revocation of practice licenses.
Multinational companies with multiple Indonesian subsidiaries may designate a Group Tax Proxy Administrator via a master board resolution, while non-resident advisors must appoint a licensed Indonesian tax consultant as a local correspondent. Existing proxies granted under prior regulations remain valid until expiry or December 31, 2026, whichever is earlier; MNC groups must register their Group Tax Proxy Administrator by November 30, 2026. Unauthorized representation exposes consultants to a 200% penalty on fees earned under Article 18(3) UU KUP.
Sources: KPP Pondok Aren Educates on New Tax Proxy and Tax Consultant Regulations via Instagram Live | East Jakarta Tax Office Examines New Tax Proxy Regulations with Tax Center | East Jakarta DGT Office Dissects New Tax Proxy Regulations | East Jakarta Tax Office Dissects New Tax Proxy Regulations with Tax Center
Secondary Regulatory & Regional Updates
- Administrative Penalty Reduction Program (PMK-71/2026): Taxpayers may obtain up to 100% reduction of administrative sanctions (interest, fines, penalties) for tax periods ending on or before December 31, 2024, provided the principal tax debt is paid or under an approved installment plan. Applications must be submitted electronically via CoreTax by December 31, 2026. Regional offices across Jakarta, West Java, South Sulawesi, Sukoharjo, and Setiabudi held workshops, fast-track processing, and door-to-door outreach to drive participation. Criminal penalties and tax crime sanctions are excluded. West Jakarta PSA Notice | North Jakarta PMK-71 FGD | DJP Papabrama Penalty Reduction Reminder | West Java II PMK-71 Socialization | West Java II Inaugural PMK-71 Session | DJP Nationwide Penalty Reduction Call | East Jakarta 62-Taxpayer Workshop | South Sulawesi PMK-71 Dialogue | West Jakarta PSA Campaign | Sukoharjo Penalty Reduction Socialization | Setiabudi Tiga Field Outreach
- Marketplace Seller Withholding & 0.5% Final Tax: Marketplace operators act as withholding agents, collecting 0.5% final income tax at settlement for MSME sellers with annual turnover up to IDR 500 million. Sellers exceeding the threshold graduate to standard rates (2% for services under Article 23, 1.5% for goods under Article 22) effective from the breach month. Individual traders may apply for a Tax Exemption Certificate (SKB) via CoreTax to reduce withholding to 0%; fraudulent SKB applications risk criminal sanctions under Article 39 UU KUP. Indonesia DJP Clarifies 0.5% Final Income Tax for Marketplace Sellers | Indonesia DJP Explains Withholding Tax and SKB for Individual Marketplace Traders
- Foreign Digital Transaction VAT (SSP-TDLN): Indonesian PKP buyers procuring digital services from unregistered foreign vendors must self-assess VAT via the SSP-TDLN mechanism in CoreTax by the 20th of the following month. Input tax credit auto-populates in the monthly SPT Masa PPN upon payment validation. Late payment incurs 2% monthly interest; failure to report SSP-TDLN in the VAT return risks a 50% penalty on underpaid tax. Indonesia Clarifies Foreign Digital Transaction VAT Obligations
- Digital Stamp Duty (Meterai Teraan Digital): The DGT opened a selection process for certified digital stamp printer providers under the digital stamp duty regime. Providers must be Indonesian legal entities with security printing experience, ISO 27001 compliance, and integration capability with the DGT verification infrastructure. Approved digital stamps will carry encrypted QR codes verifiable through the DJP online portal. Indonesian DGT Digital Stamp Printer Provider Selection
- Tax Criminal Enforcement & Peace Fine: The Bandar Lampung District Prosecutor terminated a tax criminal prosecution through a peace fine after the taxpayer settled outstanding obligations in coordination with the DJP. The Bengkulu and Lampung Regional Offices established a joint task force with the Bengkulu High Prosecutor’s Office to improve handling of cross-regional tax crime cases. Bandar Lampung Peace Fine Prosecution Halt | Bengkulu and Lampung Prosecutor Coordination
- Regional Tax Revenue Performance (Q3 2026): Riau revenue grew 28.97% to IDR 13.23 trillion; West Java III reached IDR 22.11 trillion (+19.3% YoY); South Kalimantan reached IDR 9.93 trillion (+12.5% YoY); and digital economy tax revenue reached IDR 58.75 trillion through September 2026. Growth was driven by CoreTax analytics, e-Faktur implementation, and PSA settlements. Digital Economy Tax Revenue IDR 58.75T | Riau Tax Revenue IDR 13.23T | West Java III Tax Revenue IDR 22.11T | South Kalimantan Tax Revenue IDR 9.93T | NTB Tax Revenue Q3 2026
- MSME Tax Settlement Easing Package: The government eased settlement of tax obligations for MSMEs and individuals through simplified annual SPT (SPT PP 23) for turnover below IDR 4.8 billion, installment facilities up to 24 months or IDR 10 billion without collateral at a fixed 6% per annum, and administrative penalty waivers for late 2024 SPT filings submitted by December 31, 2026. Dedicated Taxpayer Assistance Desks were deployed in every KPP. Government Eases Settlement of Tax Obligations
- DJP Partnerships & CoreTax Training: The DJP partnered with 38 Tax Administration Firms to professionalize tax intermediaries through competency assessments and ethical standards. KPP Tangerang Barat trained 118 corporate taxpayers on CoreTax annual SPT filing; KPP Bantul signed an MoU with the Regional Legislative Council for local tax data integration; KPP Bantul held UMKM digital marketing and tax compliance workshops; and the DJP visited the Mempawah Regional Secretary to strengthen intergovernmental tax synergy. DJP Partners with 38 Tax Administration Firms | KPP Tangerang Barat CoreTax Training | KPP Bantul UMKM Workshop | KPP Bantul and DPRD Synergy MoU | DJP Mempawah Regional Secretary Visit
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.