Indonesia’s tax enforcement has entered a stricter phase following the enactment of Minister of Finance Regulation (PMK) No. 111 of 2025. Effective from 1 January 2026, the regulation significantly expands the authority of the Directorate General of Taxes (DGT) to supervise taxpayer compliance. As a result, businesses and individuals now face closer monitoring, faster follow-up actions, and a higher risk of inspections if they fail to meet tax obligations. The government introduced this policy to strengthen compliance under Indonesia’s self-assessment system while improving fairness and legal certainty.
Under the new framework, the DGT no longer relies solely on post-reporting reviews. Instead, it can actively intervene when early signs of non-compliance appear. Consequently, taxpayers must ensure accurate reporting, timely payments, and proper documentation across all tax categories.
Expanded Powers Under PMK 111 Regulation
The PMK 111 regulation provides a clear legal basis for broader and more proactive supervision by the DGT. The rule allows tax authorities to oversee registered taxpayers, unregistered taxpayers, and entire regions under their jurisdiction. Through this approach, the government aims to close compliance gaps that often arise outside the formal tax system.
As stated in the regulation, “The Director General of Taxes may conduct supervision of taxpayers’ fulfillment of tax obligations to ensure compliance with tax laws and regulations.” This mandate enables the DGT to intervene earlier in potential compliance issues rather than waiting for annual audits. Moreover, the regulation applies nationwide, ensuring uniform enforcement standards across all regions.
DGT Spot Inspections and Direct Field Supervision
DGT spot inspections now play a central role in Indonesia’s tax enforcement strategy. Under PMK 111, tax officers may conduct site visits, request direct explanations, and verify business activities on location. These visits also include field geotagging to confirm the existence and use of reported business premises or assets.
In addition, the DGT may summon taxpayers for in-person or online discussions to clarify data discrepancies. When taxpayers ignore or delay responses, enforcement can escalate quickly. Through these measures, authorities seek to prevent prolonged non-compliance and ensure faster resolution of tax issues.
Taxes and Business Activities Now Under Closer Review
The Indonesian tax enforcement under PMK 111 covers a wide range of tax types and business activities. The regulation applies to Income Tax, Value Added Tax, Luxury Goods Sales Tax, Stamp Duty, Land and Building Tax, Carbon Tax, and other taxes administered by the DGT. As a result, compliance obligations now extend beyond routine tax filings.
Authorities may review business location reporting, VAT registration status, bookkeeping practices, tax payments, and withholding activities. They may also verify Land and Building Tax objects across sectors such as plantations, forestry, mining, oil and gas, geothermal projects, and mineral and coal operations. This comprehensive scope ensures that tax supervision reflects real economic activity.
Tax Compliance Supervision Targets Non-Cooperative Taxpayers
Tax compliance supervision under the new regulation sets clear timelines and consequences. Taxpayers must respond to warnings or clarification requests within 14 days from the date of delivery. However, those who need additional time may request a written extension of up to seven days before the original deadline expires.
Failure to cooperate can trigger serious administrative actions. These measures include data adjustments by authority, forced VAT registration or revocation, revocation of stamp duty collector status, service restrictions, valuation for tax purposes, and intelligence-based monitoring. In more severe cases, the DGT may proceed with full audits or preliminary evidence examinations.
Implications for Businesses and Investors in 2026
For businesses and investors, PMK 111 signals a shift toward stricter taxpayer compliance rules in 2026. Companies operating in Indonesia must prioritize accurate reporting, transparent records, and timely responses to tax authorities. Informal practices and incomplete documentation now carry higher enforcement risks.
At the same time, the government positions this policy as a step toward greater fairness. By strengthening supervision, authorities aim to ensure that all taxpayers contribute according to the same rules. As enforcement tightens, proactive compliance will remain the most effective strategy for businesses seeking regulatory certainty in Indonesia’s evolving tax environment.
Source: finance.detik.com, bloombergtechnoz.com
Image: Getty Images
