OPTIMIZING TAX COMPLIANCE: UNDERSTANDING THE DGT’S NEW SUPERVISORY FRAMEWORK (PMK 111/2025)

Effective 1 January 2026, the Directorate General of Taxes (DGT) has implemented a more structured and comprehensive approach to tax supervision. Governed by Minister of Finance Regulation No. 111 of 2025, this framework marks a significant shift toward data-driven oversight, delegating enhanced supervisory authority to the Heads of Tax Offices to optimize state revenue.

The DGT now operates under three distinct pillars of supervision:

1. Supervision of Registered Taxpayers

The primary focus remains on ensuring that existing taxpayers meet both formal and substantive obligations. Key areas of oversight include:

• Identification & Registration: Reporting business locations for NITKU and maintaining PKP (VAT-registered) status.
• Sector-Specific Compliance: Registering Land and Building Tax objects across mining, forestry, and energy sectors.
• Reporting & Payment: Timely filing of Annual/Periodic Tax Returns and the accurate withholding/remittance of taxes.
• Accounting Standards: Maintaining proper bookkeeping and records as mandated by law.

2. Supervision of Unregistered Taxpayers

To broaden the tax base, the DGT is taking a proactive “outreach” approach. This involves identifying entities that have not yet fulfilled their registration obligations, including:

• NIK-TIN Integration: Monitoring the activation of National Identity Numbers (NIK) as Taxpayer Identification Numbers (TIN).
• Identifying Potential: Mapping business activities that qualify for PKP status or Land and Building Tax objects in specific sectors.
• Proactive Enforcement: Identifying potential revenue from parties currently operating outside the formal tax system.

3. Regional Supervision

Beyond individual taxpayer data, the DGT now conducts jurisdictional monitoring. This “geographic” approach allows tax offices to:

• Map Economic Potential: Monitor local economic activities to identify new tax sources.
• Tailored Strategies: Adapt supervisory methods to the specific economic characteristics of a region.

The DGT’s Supervisory Toolkit

In executing these functions, the DGT may employ various administrative and field-based actions:

1. In-Office Actions: Issuing SP2DK (Requests for Explanation), Advisory Letters, or Warning Letters; and requesting Transfer Pricing Documentation.
2. Direct Interaction: Summoning taxpayers for meetings (in-person or virtual) and conducting site visits.
3. Supportive Measures: Proposing tax valuations, verifying data with third parties, and collecting regional economic data.
4. Taxpayer Obligations & Critical Timelines.
5. Transparency and promptness are essential when engaging with the DGT. Taxpayers are legally required to:

• • Respond to SP2DK: Written responses must be submitted within 14 days, with a possible extension of 7 days.
  • Respond to Advisory Letters: Must be addressed within a maximum of 14 days.
  • Facilitate Access: Grant the DGT access for site visits and attend requested meetings.

Conclusion

The implementation of PMK 111/2025 signals a new era of “comprehensive supervision” in Indonesia. For taxpayers, receiving an SP2DK or Advisory Letter should be handled with professional diligence.

To ensure full compliance and mitigate risks, we strongly recommend submitting well-documented responses within the legal deadlines. Engaging a licensed tax consultant can provide the necessary expertise to navigate these regulatory requirements effectively.