Objection and Appeal Penalties Under PMK 71/2026
PMK 71/2026 amends PMK 118/2024 from 2 October 2026. Penalties following a rejected objection, appeal or judicial review are no longer among the sanctions that can be reduced or waived on application.
Key points
- Tax collection letters issued for a rejected objection, appeal or judicial review fall outside the sanctions listed in Article 21A.
- The principal must be paid in full first. Paying less than the principal means the application is returned.
The Minister of Finance issued PMK 71/2026, amending PMK 118/2024, on 29 September 2026. The Ministry of Finance legal database records that it was promulgated and took effect on 2 October 2026, and remains in force until revoked.
PMK 118/2024 governs corrections, objections, and the reduction, waiver and cancellation of tax assessments and sanctions. The amendment touches only a few articles, and one of them concerns penalties that arise after a taxpayer loses a dispute.
The new Article 21A lists the administrative sanctions that can be reduced or waived.
Sanctions that can be applied for
Article 21A has five groups: sanctions in tax assessments, sanctions in collection letters linked to an assessment, sanctions in other collection letters, and land and building tax fines in assessments and collection letters. The exception sits in the second group.
That group leaves out sanctions in collection letters issued under Article 25(9), Article 27(5d) and Article 27(5f) of the General Tax Law. All three are dispute penalties. Article 25(9) imposes a penalty when an objection is rejected or granted in part, and Article 20(1) of PMK 118/2024 sets it at 30%.
Article 27(5d) imposes a penalty when an appeal is rejected or granted in part. Article 27(5f) imposes one when a judicial review decision adds to the tax still payable.
A taxpayer who loses an objection therefore can no longer use a sanction reduction application to lower that penalty. The objection penalty is not imposed if the taxpayer appeals the objection decision, under Article 20(3)(c) of PMK 118/2024.
The regulation provides a transition. Article II point 1 says applications on those three types of collection letter received before PMK 71/2026 took effect, and not yet decided, are settled under PMK 118/2024 before the amendment.
The date of receipt decides the matter. An application reaching the tax office on 1 October 2026 is reviewed under the old rule, and one arriving on 2 October 2026 is not.
Payments and the application window
The requirement to pay the principal has not changed. Article 23(5)(a) still requires the principal underlying the sanction in the assessment or collection letter to be paid in full.
What changed is how payments are counted. Previously, payments made before the month of application were split proportionally between principal and sanction.
The new Article 23(6) and (7) count payments against the principal first. Only the excess over the principal counts as payment of the sanction.
This matters because Article 27(4) limits relief to sanctions not yet paid. The less a payment is absorbed by the sanction, the larger the sanction that can still be applied for.
The attachment to PMK 71/2026 gives an illustration. An underpayment assessment of Rp140 million consists of Rp100 million principal and Rp40 million sanction, paid as Rp50 million and Rp70 million on two dates before the application.
The two payments clear the Rp100 million principal first. The remaining Rp20 million counts as payment of the sanction, so the sanction that can be reduced is Rp20 million.
In another example in the same attachment, only Rp80 million has been paid. The principal is not cleared, so the application fails the requirements and is answered with a return letter.
The new Article 27A opens a time-limited application route. To support the national economy, the Director General of Taxes may reduce or waive sanctions meeting the Article 23 requirements for applications filed within 2 years of the regulation taking effect.
The article says may, so relief remains at the Director General’s discretion. It also does not state grounds for the application, while Article 27(2) on reviewing grounds of oversight was not amended.
The end date is not stated either. Article 27A sits inside PMK 118/2024, in force since 1 January 2025, so two years from that date would be 1 January 2027.
Counted from PMK 71/2026 taking effect, the limit is 2 October 2028. Until the tax authority confirms which reading applies, an application filed before 1 January 2027 falls within both limits.
The remaining changes are drafting points. Article 16(5) now counts the 10 working day deadline for a response letter from after, rather than from, the date the hearing invitation is sent.
Changes to the appeal route after the Tax Court transfer are covered in the Indonesian article on the transfer to the Supreme Court.
Frequently asked questions
Our objection was rejected and the penalty letter arrived in August. Can we still apply this week?
Article 21A leaves out collection letters issued under Article 25(9) of the General Tax Law. Article II of PMK 71/2026 protects only applications received before 2 October 2026 and not yet decided. An application sent after that date is not covered.
We paid part of an assessment last month. Does that reduce the sanction we can apply for?
Under the new Article 23(6) and (7), that payment counts against the principal first. Only the part above the principal counts as payment of the sanction, and Article 27(4) limits relief to sanctions not yet paid.