In practice, at the beginning of 2025, there remained numerous technical obstacles to using the Coretax system. Undeniably, the transition from the former system to the Coretax system requires adaptation both from the taxpayers and the tax authority. Corporate and individual taxpayers need to familiarise themselves with the steps to use the Coretax system.
The government expects that the Coretax system will operate stably within three to four months of its implementation. To address the obstacles faced by taxpayers during the transition period, the DGT has issued the policy on the nullification of administrative penalties related to the implementation of the Coretax through the Director General of Taxes Decree Number KEP-67/PJ/2025. The decision was enforced at an early stage of the implementation of the Coretax system to accommodate constraints faced by the taxpayers, such as delays in the payment and/or remittance of tax payable as well as the filing of periodic tax returns. However, the obstacles experienced by the taxpayers also affect the realisation of tax revenues. Tax authorities still use the former tax administration system, such as DJP Online, despite the implementation of the Coretax system. For example, the annual income tax return until the 2024 tax year was still filed using DJP Online. In contrast, the Coretax system will be used for the filing of the annual income tax return for the 2025 tax year onwards. 11/12 VAT Regime, Joint Operations and e-Commerce Art. 22 Income TaxChanges in Indonesia’s tax landscape are also influenced by the further implementation of the HPP Law and Job Creation Law. One of the policies that has had a major impact is the rise of the statutory VAT rate from 11% to 12% effective 1 January 2025. However, based on President Prabowo Subianto's instructions, the increase in tax burden only applies to luxury goods (which have been subject to STLGs). Following up on this issue, the minister of finance has issued MoF Reg. 131/2024. The government uses the alternative tax base (dasar pengenaan pajak/DPP in Indonesian) scheme to accommodate the president's instructions. The alternative tax base amounts to 11/12 of the import value, selling price or consideration for an import/supply of taxable goods ( barang kena pajak/BKP in Indonesian) other than those subject to STLGs, intangible taxable goods as well as taxable services ( jasa kena pajak/JKP in Indonesian). With the issuance of MoF Reg. 131/2024 and PER-1/PJ/2025, the government has expanded the scope of use of the alternative tax base scheme. The objective is to ensure that the tax burden remains unchanged, as it uses the 11/12 scheme multiplied by the rate of 12% = 11%. The provisions under MoF Reg. 131/2024 are excluded for the alternative tax base and certain amount formulas stipulated under the former separate regulations. However, in due course, the minister of finance released MoF Reg. 11/2025 with an omnibus scheme, revising a number of former minister of finance regulations. The majority of alternative tax base and VAT of a certain amount formulas use a multiplier of 11/12. This affects several transactions, such as supplies of taxable goods/taxable services to free trade zones, liquefied petroleum gas (LPG), tobacco products, mobile phone credit and tokens as well as subsidised fertilisers for the agricultural sector.
Next, transactions of supplies of certain agricultural products, used motor vehicles, certain taxable services, acquired collateral, gold jewellery and gold bullion, commissions or remunerations paid to insurance agents, self-building activities, supplies of crypto assets as well as joint operations (JO or kerja sama operasi/KSO in Indonesian).
Ultimately, the 11/12 multiplier has given rise to a new regime in the VAT system in Indonesia. The new regime significantly impacts several aspects, ranging from tax calculation to tax administration for taxpayers. Several administrative procedures, such as the preparation of tax invoices and the filing of taxes have also been adjusted.
In terms of JOs, the government has also issued MoF Reg. 79/2024 concerning the Tax Treatment of JOs. Entering into force on 18 October 2024, this regulation is intended to consolidate the rules on the tax treatment of JOs that were previously scattered across several legal products, such as Gov. Reg. No. 44/2022 (a derivative regulation of the HPP Law) and PER-04/PJ/2020. Pursuant to the provisions under MoF Reg. 79/2024, a JO is required to register to obtain a TIN as a corporate taxpayer in the event that the JO cooperation agreement or the implementation of the cooperation fulfils certain criteria. The JO is also required to report its business to be registered as a taxable person in the event that it has exceeded the threshold of small-scale entrepreneurs and/or one or more members have been registered as taxable persons. In addition, the continuation of the implementation of the HPP Law and the Job Creation Law is also marked by MoF Reg. 37/2025 concerning the Appointment of Other Parties as Income Tax Collection Agents as Well as Procedures for the Collection, Remittance and Filing of Income Tax Collected by Other Parties on Income Received or Accrued by Domestic Merchants Using Electronic Commerce (e-commerce or perdagangan melalui sistem elektronik/PMSE in Indonesian) Mechanisms. The appointment is based, among others, on the use of escrow accounts as well as the thresholds of certain criteria in the form of transaction value and number of users in Indonesia, which are further specified in PER-15/PJ/2025. The policies on Art. 22 Income Tax collection also contain an exclusion for individual merchants with a gross turnover of up to IDR500 million in the current tax year. This is aligned with MoF Reg. 164/2023, namely individual taxpayers who have a certain gross turnover of the fraction of gross turnover of up to IDR500 million in one tax year are not subject to income tax.
To obtain the exclusion from income tax collection, an individual taxpayer must submit a statement letter as well as information on the TIN/national identification number and a correspondence address. In addition, for merchants whose income is subject to final income tax, Art. 22 Income Tax that has been collected is treated as the tax settlement for final income tax using the under/overpayment mechanisms following applicable provisions.
Tax Audits and InvestigationsThe continuation of the implementation of the HPP Law is also marked by the issuance of a new regulation related to tax audits, namely MoF Reg. 15/2025. Through this minister of finance regulation, the tax authority reconfigures the provisions on tax audits to bring them into line with the HPP Law and its derivative regulation, namely Gov. Reg. 50/2022 concerning Procedures for the Exercise of Tax Rights and Fulfilment of Tax Obligations. MoF Reg. 15/2025 has been issued to simplify the regulation. Previously, the provisions on tax audits were spread across three minister of finance regulations, namely MoF Reg. 17/2013, MoF Reg. 256/2014 and Art. 105 of MoF Reg. 18/2021 concerning Job Creation in the Fields of Income Tax, VAT and STLGs as well as GPTP. In comparison, one of the key changes can be found in the types of tax audits and criteria for tax audits. Pursuant to MoF Reg. 15/2025, tax audits to assess compliance with the fulfilment of tax obligations are conducted using three types of tax audits, including complete audits, focused audits and specific audits. MoF Reg. 15/2025 also expands the criteria for actions subject to audits for other purposes into 25 categories. The increase in the number of criteria for these actions is due to the incorporation of the L&B Tax audits in one regulation.
In addition, there are provisions concerning the discussion of temporary findings. The discussion of temporary findings is a discussion between a taxpayer and tax auditors on temporary audit findings outlined in an official report to provide assurance that the findings have been based on solid and relevant evidence as well as comply with the regulations.
On the other hand, there is a reduction in the audit period, including the assessment of compliance for taxpayers in one group and/or taxpayers indicated to conduct transfer pricing transactions. For example, in the current regulation, there is no extension of the assessment period, except for audits of group taxpayers and transfer pricing which can be extended by four months.
Further, there is a change in the deadline for the closing conference (pembahasan akhir hasil pemeriksaan/PAHP in Indonesian). The period for the closing conference and its reporting has now been reduced from a maximum of two months to a maximum of 30 days from the date of the tax audit report. The closing conference is a discussion stage between the taxpayer and tax auditors on audit findings, the results of which are subsequently outlined in the official report of the closing conference, containing the correction of the principal amount of tax payable and the calculation of administrative penalties and/or fines.
In addition to tax audits, there are also tax crime investigations. These provisions are also stipulated under the new regulation, namely MoF Reg. 17/2025. This regulation also sets out the provisions on settlement of cases that have been transferred to the court as well as revises the provisions on the termination of tax crime investigations. In general, the implementation of investigations stipulated under MoF Reg. 17/2025 are related to the basis for investigations and the series of investigation procedures. The investigation procedures range from the summoning for an investigation, determination of the suspect, to the termination of investigations. MoF Reg. 17/2025 also revises the provisions on the termination of investigations in the context of state revenue purposes, which were formerly stipulated under MoF Reg. 55/2016 as amended by Art. 108 of MoF Reg. 18/2021. If required, the public prosecutor may submit a written request to the Directorate General of Taxes (DGT) for the information on the amount of settlement, by taking into account the loss to state revenues and the administrative penalties stipulated under this regulation. MoF Reg. 17/2025 also contains provisions on the handling of investigations outside Indonesian jurisdiction or across borders. Taking effect on 25 February 2025, this minister of finance regulation also accommodates the provisions on the submission of documents as well the application by the taxpayer or suspect through the Coretax. The issuance and delivery of decisions and documents submitted via the Coretax shall comply with MoF Reg. 81/2024. Imposition of Global Minimum Tax Starting in 2025, Indonesia has officially adopted global anti-base erosion (GloBE) rules through MoF Reg. 136/2024. GMT is intended for multinational enterprise (MNE or perusahaan multinasional/PMN in Indonesian) groups with a gross turnover of a minimum of EUR750 million or approximately IDR12.7 trillion (the exchange rate on 23 January 2025) per year based on consolidated financial statements of the ultimate parent entity (UPE). The gross turnover value may be fulfilled in a minimum of two of the four fiscal years before the fiscal year in which the global minimum tax (GMT) is imposed. GloBE rules set out under MoF Reg. 136/2024 are, in essence, in line with the Pillar 2 agreement adopted by the Organisation for Economic Co-operation and Development (OECD) and the G-20. Pursuant to MoF Reg. 136/2024, GMT is imposed through three schemes, namely domestic minimum top-up tax (DMTT), income inclusion rules (IIR) and undertaxed payment rules (UTPR). The source jurisdiction reserves the right to impose top-up tax based on the DMTT if the profits of the constituent entities of an MNE in the jurisdiction are subject to tax at an effective rate of less than 15%.
If the source jurisdiction does not enforce the DMTT, the jurisdiction of the UPE reserves the right to impose the top-up tax based on the IIR on profits undertaxed by the source jurisdiction. However, if the source jurisdiction does not apply the DMTT and the UPE does not impose an IIR, another jurisdiction may impose top-up tax with adjustments through the UTPR.
The UTPR functions as the final, backstop mechanism to ensure that no residual gap remains when applying adjustments in other jurisdictions, thereby, the total tax reaches global standards. In the end, the three schemes interlock and operate in stages to prevent profit shifting to low-tax jurisdictions. Moreover, the GMT is a common approach.
The implementation of GloBE rules in Indonesia has also embarked on a new chapter, as marked by the granting of the status qualified to the application of the IIR and DMTT pursuant to MoF Reg. 136/2024. Qualified DMTT (QDMTT) implemented by Indonesia has also fulfilled the standards to be recognised as the QDMTT safe harbour. This implies that the parent entity is not required to calculate top-up tax on the income of constituent entities in the jurisdictions of QDMTT safe harbour status.
The Ministry of Finance has stated that taxpayers constituting covered constituent entities must administer GMT through the annual DMTT income tax return. This tax return is used by constituent entities constituting tax residents to file the top-up tax liabilities under the DMTT. Approximately 5,000 entities are covered constituent entities.
Customs and Excise SupervisionThe domestic tax landscape has also seen developments due to the ongoing customs and excise reforms, signified, inter alia, by the issuance of MoF Reg. 104/2024 concerning Guidelines for the Maintenance of Bookkeeping in the Field of Customs and Excise. The regulation has been issued to align with the development of electronic systems as well as accommodate the needs of financial data and information collection for the parties conducting activities in the field of customs and excise. In addition, the government has also issued MoF Reg. 114/2024 concerning Customs Audits and Excise Audits. One of the considerations underlying the issuance of this minister of finance regulation is to optimise the audit process as well as to further improve supervision of customs audit and excise audit mechanisms. Both MoF Reg. 104/2024 and MoF Reg. 114/2024 repeal the former regulations. The Directorate General of Customs and Excise (DGCE) explains that the issuance of both regulations aims to optimise customs and excise supervision through audit mechanisms. Moreover, the implementation of bookkeeping and audits is integral to customs and excise. However, the former minister of finance regulations had not regulated the maintenance of bookkeeping to assess the compliance of service users as well as had not described the business process of customs and excise audits as a whole. In addition, the government has also issued MoF Reg. 115/2024 concerning the Collection of Customs and Excise Liabilities. The customs and excise authority has stated that the government is improving the governance of the collection of customs and excise liabilities as well as expanding the scope of collection objects. Bureaucratic procedures, such as blocking and confiscation of assets, have also been simplified. In line with the issuance of MoF Reg. 115/2024, the government seeks to establish procedural efficiency by managing electronic collection through CEISA 4.0. Moreover, MoF Reg. 115/2024 also allows more integrated supervision through granting additional authority to the head of the regional customs and excise office to appoint bailiffs and monitor the implementation of collection in each region. In the area of customs, the government has also issued several regulations related to imports of goods. One example is MoF Reg. 4/2025 related to customs, excise and tax provisions on imports and exports of consignment goods. Further, MoF Reg. 25/2025 concerning customs provisions on imports of personal effects. Next, MoF Reg. 34/2025 pertaining to the provisions on exports and imports of goods brought by passengers and crew members. Specifically related to excise, at the end of 2024, the government issued two minister of finance regulations concerning tobacco or cigarette excise tariffs. First, MoF Reg. 96/2024 concerning the Second Amendment to MoF Reg. 193/2021 concerning Excise Tariffs on Tobacco Products in the Form of Cigarettes, Cigars, Leaf or Corn Husk Cigarettes and Sliced Tobacco. Second, MoF Reg. 97/2024 concerning the Third Amendment to MoF Reg. 192/PMK.010/2021 concerning Excise Tariffs on Tobacco Products in the Form of Cigarettes, Cigars, Leaf or Corn Husk Cigarettes and Sliced Tobacco. Through these minister of finance regulations, the government has officially decided not to increase tobacco excise tariffs. However, the government has increased the retail price ( harga jual eceran/HJE in Indonesian) of almost all tobacco products effective from 1 January 2025. Local TaxesThe developments of the tax landscape are also steered by the ongoing implementation of the HKPD Law. Moreover, the provisions on motor vehicle tax ( pajak kendaraan bermotor/PKB in Indonesian) surtax, motor vehicle duty ( bea balik nama kendaraan bermotor/BBNKB Indonesian) surtax as well as non-metallic mineral and rock ( mineral bukan logam dan bantuan/MBLB Indonesian) tax surtax have been officially effective as of 5 January 2025. The policies allow additional potential revenues for municipal or regency governments. In addition, the government has also issued a new regulation related to the valuation of rural and urban L&B Tax ( pajak bumi dan bangunan perdesaan dan perkotaan/PBB-P2 in Indonesian), namely MoF Reg. 85/2024. This minister of finance regulation provides guidelines for the valuation of rural and urban L&B Tax for local governments, specifically in determining the sales value of taxable object ( nilai jual objek pajak/NJOP in Indonesian) that are relevant to the current condition of the taxable object and the amount of the value is reliable. Further, as part of the ongoing implementation of the HKPD Law, the Ministry of Finance has issued MoF Reg. 7/2025 concerning Guidelines for Local Tax Audits and Collection. This regulation also constitutes an implementing regulation under Art. 73 paragraph (5) and Art. 84 of Gov. Reg. No. 35/2023 concerning General Provisions on Local Taxes and User Charges. In general, MoF Reg. 7/2025 affirms that regional heads are authorised to conduct local tax audits by delegating authority to appointed officials. The local tax audits are implemented in the context of assessing compliance with the fulfilment of tax obligations and other purposes in the context of implementing statutory provisions on local taxes and user charges.
The local tax audits for other purposes, for example, are audits for the ex officio issuance of local taxpayer identification numbers (nomor pokok wajib pajak daerah/NPWPD in Indonesian), local taxpayer identification number deregistration, resolution of the application for objections, matching of data/information tools or audits in the context of tax collection.
On the other hand, a local tax audit to assess compliance is conducted if a taxpayer applies for a refund, there is concrete data that indicates a tax overpayment or the taxpayer is selected to be examined based on a risk analysis.
Appointed officials are authorised to appoint and dismiss bailiffs as well as issue letters related to confiscation, ranging from reprimand letters, distress warrants, confiscation in orders, immediate and total collection orders, to gijzeling orders.
Tax Revenues
The various regulatory changes that have occurred are integral to the goal of increasing tax revenues. Based on the 2025 Financial Note, the tax revenue target in the state budget (anggaran pendapatan dan belanja negara/APBN in Indonesian) stood at IDR2,490.9 trillion or 82.8% of the state revenue target. The target was set taking into account the projected improvement of national economic performance, the continued tax reforms as well as the existing economic challenges and opportunities.
However, in the first half of 2025, the global economy was overwhelmed by uncertainty. The trade war has resulted in a shift in the structure of the international economy, from globalisation to fragmentation, thus triggering a more protectionist policy stance.
Amidst these conditions, the realisation of tax revenues in the first semester of 2025 levelled at IDR978.3 trillion, representing 39.3% of the state budget target. This implies that the tax revenues contracted by 4.8% compared to the realisation of the same period in 2024, which amounted to IDR1,028.0 trillion. The configuration of fiscal policies accounts for the tax revenue performance, including the 12% VAT rate which is limited to luxury goods, the dynamics of income tax and VAT refunds, the policy on the settlement of excise stamps as well as the relaxation of exports of copper commodity. Throughout 2025, state revenues are projected to fall short of the target. The state revenue outlook is predicted to amount to only IDR2,865.5 trillion or 95.4% of the target of IDR3,005.1 trillion. Tax revenues are projected to reach IDR2,387.3 trillion or approximately 95% of the target.
To optimise revenue potential, the government has established several general policies and technical tax policies. One of the directions of tax technical policies in the 2025 Financial Note is the integration of technology to strengthen the tax system through the continuous implementation of the Coretax as well as the preparation of the risk-based priority target list of tax revenue (daftar sasaran prioritas pengamanan penerimaan pajak/DSP4 in Indonesian).
On the other hand, the Ministry of Finance also encourages collaboration between the DGT and DGCE through joint programmes to accelerate the collection of state revenue. This synergy is expected to increase taxpayer and/or payer compliance as well as reduce the number of receivables.
In relation to the tax ratio, the Ministry of Finance highlights that the considerable size of the shadow economy constitutes one of the main obstacles to increasing the tax ratio. The larger the unrecorded share, the lower the tax ratio. Indonesia’s tax ratio in 2024 stood at 10.08%, whereas the 2025 projection is approximately 10.03%.
In terms of the development of several regulations between September 2024 and August 2025, there has been a noticeable trend towards strengthening tax supervision. At the same time, the use of technology through the Coretax system is expected to accelerate various processes related to the fulfilment of tax obligations. Accordingly, the provisions are designed to align with the technological system.
As part of strengthening supervision, the DGT has codified taxpayers’ rights and obligations as well as service ethics standards through the taxpayers' charter stipulated under PER-13/PJ/2025. The charter, launched in July 2025, is expected to increase mutual trust, mutual respect and mutual responsibility between taxpayers and the state. This charter contains eight taxpayers’ rights and eight taxpayers’ obligations.
Thus, 2025 marks a phase of comprehensive consolidation of tax policies, starting with the enactment of a 12% VAT rate for luxury goods, recalibration of the VAT burden for non-luxury goods through the alternative tax base of 11/12, the appointment of e-commerce operators as other parties that collect Art. 22 Income Tax on the income of domestic merchants, to the implementation of the GMT.
In respect of the downstream sector, supervision is affirmed through an audit and investigation regulatory package. In contrast, in terms of the upstream sector, services and ethical standards are safeguarded by the taxpayers’ charter. All of these policies target three goals, namely expanding the tax basis and closing tax loopholes, maintaining legal certainty as well as securing revenue amidst the tax ratio, which stands at a mere 10% and the shadow economy.
On the practical level, tax administration data and processes are integrated with the Coretax system. The success of this era is highly dependent on the speed of Coretax stabilisation, data quality, clear socialisation and consistency of risk-based compliance enforcement.
Further, the developments of statutory provisions in the field of taxation have been rapid. In addition, the Indonesian government has frequently adopted the omnibus scheme, even at the sub-statutory level.
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