Indonesia Overhauls Tax Debt Payment Rules to Prioritize Principal Repayment

Indonesia introduced Minister of Finance Regulation Number 71 of 2026, which modifies the tax debt payment scheme by requiring that taxpayer payments be applied to the principal tax debt before any administrative sanctions. The rule, which took effect on October 2, 2026, also refines the timeline for filing responses to objections on tax research outcomes and clarifies the conditions under which sanctions can be reduced or eliminated.

However, it specifies that sanctions arising from objections, appeals, or reviews are excluded from reduction under these mechanisms. Director General of Taxes Bimo Wijayanto stressed that the amendment is not a tax amnesty and that the principal tax liability remains enforceable. He added that the reform aims to speed up the clearance of outstanding principal debts, bolster voluntary compliance, and help MSMEs preserve cash flow. The Directorate General of Taxes will continue to provide guidance to ensure proper understanding and implementation of the new provisions.