To support Indonesia’s economic recovery and provide incentives to the public, the Ministry of Finance has issued Regulation No. 10 of 2025 (PMK-10) regarding Article 21 income tax incentives on income received by certain employees working in particular industrial sectors during the 2025 fiscal year.
The Article 21 income tax payable will be borne by the government for the following.
Employers that have a business classification code listed in the appendix of PMK-10 and that conduct business activities in the following industries:
Footwear;
Textiles and apparel;
Furniture; or
Leather and leather goods.
Certain permanent employees who:
Have a taxpayer identification number and/or a national identification number, as well as being integrated with the administration system of the Directorate General of Taxes (DGT);
Receive a gross salary, either regular or irregular, not exceeding IDR10 million per month starting from January 2025; and
Are not receiving any other Article 21 income tax incentives borne by the government.
Certain non-permanent employees who:
Have a taxpayer identification number and/or national identification number, as well as being integrated with the administration system of the DGT;
Receive wages in the amount of (i) an average not exceeding IDR500,000 per day starting from January 2025, in the event that the wages are received on a daily, weekly, piece rate, or lump-sum payment basis; or (ii) not exceeding IDR10 million per month; and
Are not receiving any other Article 21 income tax incentives borne by the government.
The portion of Article 21 income tax borne by the government must be paid in full to the employees by the employer.
The employer is required to report and submit the utilisation of this incentive for the fiscal year 2025 by January 31 2026. Failure to submit the report by the deadline will result in the incentive being deemed not utilised, and the employer will be obligated to repay the Article 21 income tax for the 2025 fiscal year.
This regulation became effective as of February 4 2025.
Updated effective VAT rate for certain VAT bases
Following the update to the effective VAT rate for non-luxury goods as stipulated by Minister of Finance Regulation No. 131 of 2024, the minister of finance has issued Regulation No. 11 of 2025 to provide legal certainty for domestic taxpayers in certain business sectors.
In simple terms, this regulation confirms the equality of VAT treatment for transactions that apply “other value” (VAT invoice code 04) and “certain value” (VAT invoice code 05) as the tax base, whereby although the applicable VAT rate became 12%, the effective tax base would be multiplied by 11/12 as well. Accordingly, there is no additional VAT burden for non-luxury goods and services due to the increase in the VAT rate. With the release of this regulation, several previous regulations that governed these matters have been amended and replaced.
Even though this regulation was issued and became effective on February 4 2025, its provisions have been in effect since January 1 2025. It is important to note that taxpayers mentioned in this regulation that have issued incorrect tax invoices are encouraged to issue replacement VAT invoices to prevent future tax disputes.
New tax audit procedures
On February 14 2025, the minister of finance introduced Regulation No. 15 of 2025 (PMK-15), updating Indonesia’s tax audit procedures. While retaining some of the provisions in the previous regulations – i.e., PMK-17/2013, PMK-184/2015, PMK-256/2014, and PMK-18/2021 – PMK-15 introduces key refinements to enhance clarity and efficiency.
The salient changes in PMK-15 are as follows:
PMK-15 classifies tax audits into three categories, along with their respective timelines, as per the table below.
Tax audit type | Scope of audit | Timeline |
Comprehensive tax audit (pemeriksaan lengkap) | Full-scope audit covering all tax components | Five months |
Focused tax audit (pemeriksaan terfokus) | Detailed examination of specific tax items | Three months |
Specific tax audit (pemeriksaan spesifik) | Limited review of selected tax elements | One month |
Notes: (i) The closing and reporting period is a maximum of 30 working days; (ii) for group taxpayers and transfer pricing audits, the testing period may be extended by up to four months (previously six months); and (iii) for focused tax audits, the tax auditor is required to issue a written notification to the taxpayer specifying the items under examination.
Taxpayers are now required to submit their written response to the tax audit findings notification letter (SPHP) within five working days, down from the previous seven-day deadline, and no extension can be applied.
PMK-15 also mandates a discussion of provisional findings (pra-SPHP) between the auditors and the taxpayer at least one month before the SPHP issuance. During this stage, the taxpayer may submit supporting documents; provide explanations; and present witnesses, experts, or third-party representatives. The tax auditors are required to record all discussions, documents submitted, and the taxpayer’s attendance in official minutes. This additional step allows taxpayers more time to address findings before the formal SPHP response deadline. However, in specific tax audits, certain procedures are not applicable, including the obligation to conduct a discussion of provisional findings (pembahasan temuan sementara) and the initial meeting to explain the tax audit objectives, along with the taxpayer’s rights and obligations following the issuance of the tax audit notification letter (SP2).
PMK-15 accommodates the Coretax system for document submission and electronic signatures on audit-related documents. Furthermore, SPHP notifications and taxpayer responses can no longer be delivered via post, courier, or forwarding services, reinforcing the use of digital platforms for compliance.
These new procedures apply to tax audits initiated from February 14 2025, as indicated by the issuance of the tax audit notification letter. Audits initiated before this date will continue under the previous framework.
Investigation of criminal acts in the field of taxation
The minister of finance issued Regulation No. 17 of 2025 (PMK-17) concerning the Investigation of Criminal Acts in the Field of Taxation on February 19 2025. This regulation provides clarity and transparency in the procedure of investigation of tax crimes.
Investigations can only be carried out by investigators based on an investigation letter issued following an incident report. The investigators (DGT officers), in the implementation of their duties, are under the coordination and supervision of the investigators of the National Police of the Republic of Indonesia. Similar to the previous regulation, PMK-17 also stipulates the procedure of investigation termination if the taxpayer agrees to redeem the state losses, plus the administrative penalties.
In addition, this regulation includes provisions regarding requests for information on state revenue losses by the prosecutor and the procedure of cross-border investigations. The document correspondence can also now be filed via Coretax, in accordance with the provisions of PMK 81/2024.
Coretax transition: waiver of administrative penalties
On February 27 2025, the DGT issued Decree No. KEP-67/PJ/2025 regarding the policy of eliminating administrative penalties for late payment of taxes and reporting of tax returns. This policy was made to support the transition to the Coretax system that went live in January 2025.
The waiver of administrative penalties referred to in this decree is summarised as follows.
Waiver of administrative penalties for late reporting of tax returns
Tax period | ||||||||
December 2024 | January 2025 | February 2025 | March 2025 | |||||
Monthly tax returns for Article 21/26 withholding income tax (WHT) and unification | X | N/A | V | February 28 2025 | V | March 31 2025 | V | April 30 2025 |
Monthly tax returns for Article 4(2) WHT on income from land/building transfers | V | January 31 2025 | V | February 28 2025 | V | March 31 2025 | V | April 30 2025 |
Monthly tax returns for Article 4(2) WHT on income from certain gross revenue and Article 25 income tax | X | N/A | V | February 28 2025 | V | March 31 2025 | V | April 30 2025 |
Monthly VAT returns | X | N/A | V | March 10 2025 | V | April 10 2025 | V | May 10 2025 |
Stamp duty returns | V | January 31 2025 | V | February 28 2025 | V | March 31 2025 | V | April 30 2025 |
V: Administrative penalty waived for monthly tax returns reported up to that date
X: Administrative penalty waiver is not available
Waiver of administrative penalties for late payment of tax
Tax period | ||||||||
December 2024 | January 2025 | February 2025 | March 2025 | |||||
Articles 15, 21, 22, 23, 25, 26, and 4(2) WHT (except for final income tax from land/building transfers) | X | N/A | V | February 28 2025 | X | N/A | X | N/A |
Article 4(2) WHT on income from land/building transfers | V | January 31 2025 | V | February 28 2025 | X | N/A | X | N/A |
VAT and luxury goods sales tax | X | N/A | V | March 10 2025 | X | N/A | X | N/A |
Stamp duty collected by stamp duty collectors | V | January 31 2025 | V | February 28 2025 | X | N/A | X | N/A |
V: Administrative penalty waived for payment of tax up to that date
X: Administrative penalty waiver is not available
The waiver is carried out without a tax collection notice. If a tax collection notice has been issued, the head of the regional tax office will cancel the administrative penalty on an ex officio basis.
This decree is effective starting February 27 2025.
