The Indonesian Directorate General of Taxes (Direktorat Jenderal Pajak or “DGT”) has issued new guidelines on taxpayer compliance supervision under Director General of Taxes Circular Letter No. SE-8/PJ/2026 on Guidelines for the Supervision of Taxpayer Compliance (the “Circular Letter”).
The Circular Letter serves as an internal implementation guideline for the DGT in carrying out taxpayer compliance supervision under Minister of Finance Regulation No. 111 of 2025 on the Supervision of Taxpayer Compliance (“MOF Regulation 111/2025”).
The Circular Letter also revokes and replaces the following four previous circular letters:
- Director General of Taxes Circular Letter No. SE-14/PJ/2019 on Procedures for Tax Extensification;
- Director General of Taxes Circular Letter No. SE-11/PJ/2020 on Procedures for Field Data Collection and Data Quality Assurance in Connection with the Expansion of the Tax Database;
- Director General of Taxes Circular Letter No. SE-05/PJ/2022 on the Supervision of Taxpayer Compliance; and
- Director General of Taxes Circular Letter No. SE-9/PJ/2023 on the Follow-Up of Concrete Data.
Background
Indonesia applies a self-assessment tax system, under which taxpayers are generally responsible for calculating, paying and reporting their own tax liabilities. To ensure that these obligations are properly and continuously fulfilled, the DGT carries out guidance and supervision of taxpayer compliance. This supervision is one of the DGT’s principal functions and is conducted in accordance with the applicable tax laws and regulations.
The DGT’s supervision is not limited to persons or entities that have already been registered as taxpayers. It also covers persons or entities that should have been registered but have not yet completed their registration. Broadly, taxpayer supervision is divided into the following three categories:
- supervision of registered taxpayers;
- supervision of unregistered taxpayers; and
- area-based supervision of economic activities and potential tax objects within a particular jurisdiction.
Supervision of Registered and Unregistered Taxpayers
The form of supervision applied by the DGT will depend on the taxpayer’s registration status and the nature of the data or information being reviewed. In relation to both registered and unregistered taxpayers, the DGT may request explanations regarding data and/or information based on records already available to the DGT. The supervision may also cover tax obligations relating to objects that have or have not yet been subject to Land and Building Tax (Pajak Bumi dan Bangunan or “PBB”).
For registered taxpayers, supervision is principally carried out through:
- Periodic Payment Supervision (Pengawasan Pembayaran Masa or “PPM”), which focuses on compliance with periodic tax payment and reporting obligations; and
- Material Compliance Supervision (Pengawasan Kepatuhan Material or “PKM”), which assesses whether the taxpayer’s overall tax obligations have been properly fulfilled having regard to its actual circumstances and business activities.
For unregistered taxpayers, supervision is carried out through tax extensification activities, namely efforts to identify and register persons or entities that have met the applicable requirements to be registered as taxpayers.
Another key aspect of the Circular Letter is the introduction of three types of PKM, namely comprehensive review, simplified review, and automated review. The scope and depth of the review vary depending on the type of PKM conducted:
- Comprehensive Review: a broad assessment covering all types of taxes applicable to a taxpayer for fiscal years preceding the current fiscal year. The review may include, among other things, an analysis of the taxpayer’s business processes, financial statements, and transfer pricing arrangements.
- Simplified Review: an assessment covering some or all types of taxes applicable to a specified taxpayer or category of taxpayers. This review may involve an analysis of business processes and/or financial statements and may be conducted in respect of the current fiscal year and/or prior fiscal years.
- Automated Review: a limited assessment covering one or more types of taxes and one or more tax periods, generally conducted through an automated review mechanism.
Area-Based Supervision and Data Collection
In addition to supervising specific persons or entities, the DGT also conducts area-based supervision by collecting data on economic activities within a particular working area. This supervision is intended to improve taxpayer compliance, expand the DGT’s tax database and strengthen the DGT’s understanding of potential taxable activities within the relevant area.
Data collection may be carried out through field or non-field activities. Field data collection may involve visits to a taxpayer’s or related party’s residence, registered office, place of business or location where professional or independent services are performed. These activities are intended to identify persons or entities that may have tax obligations and to obtain information on potential tax objects. Non-field data collection may be conducted through the use of information technology, administrative records and other available information sources without requiring a direct visit to the relevant location. This enables the DGT to obtain and analyse information on a broader and more efficient basis.
Supervision Methods
In practice, the DGT may conduct supervision through various methods, including site visits, canvassing of business activities within a particular area, direct observation, the establishment of information networks with local authorities, the use of remote-sensing technology, the collection of information from websites, media monitoring, the review of journals or academic publications, and the analysis of unidentified data.
The DGT may also analyse specific taxpayers, economic areas, findings from tax audits or investigations, and other relevant DGT business processes. Supervision may further involve cooperation and information exchange with other parties, provided that such activities are conducted in accordance with applicable law.
In general, the supervision process begins with the systematic identification and collection of relevant data. The information obtained may then be used by the DGT to assess whether any tax obligations remain outstanding and whether further follow-up action is required.
Key Takeaways for Businesses
The Circular Letter reflects the DGT’s efforts to make taxpayer compliance supervision more targeted, data-driven and responsive to developments in information technology. For businesses, this means that the DGT may increasingly rely on data, technology and information from multiple sources when assessing tax compliance. Companies should therefore ensure that their tax payments, tax filings, transactions and business records are consistent and supported by adequate documentation. Any inconsistency between information reported by a company and information obtained by the DGT from other sources may lead to a request for clarification, further review or a tax audit. Businesses should accordingly strengthen their internal tax controls and conduct periodic reviews of their tax compliance position.
For further information, please contact:
MetaLAW, Legal & Tax Consultant, Jakarta, Indonesia
general@metalaw.id
