https://provisio-id.com/provisioconsulting Interest Rates Tax Administration Sanctions and Interest Fees January 2025
In early 2025, the Ministry of Finance of the Republic of Indonesia has set the interest rate as the basis for calculating administrative sanctions in the form of interest and interest rewards. This provision is regulated through Decree of the Minister of Finance Number 19/KM.10/2024. This policy applies for the period January 1, 2025 to January 31, 2025.
Basis for Calculation of Tax Administrative Sanction Rates
The interest rate for tax administrative sanctions in Indonesia is calculated based on the Bank Indonesia benchmark interest rate (BI Rate), with an additional uplift factor that varies according to the type of violation committed by the taxpayer in accordance with the provisions in the General Provisions and Tax Procedures Law (UU KUP). After the uplift factor is added, this rate is divided by 12 to get the monthly tax sanction rate.
Uplift Factor Categories:
0% – 10% for violations with self-assessment
15% for violations with official assessment
With this calculation, changes in the BI Rate affect the sanction rate directly. When the BI Rate increases, the sanction rate will also increase and vice versa. Unlike the 2% per month flat rate scheme used previously, this system generally results in more flexible and lower rates.
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Interest Rates for Tax Administrative Sanctions January 2025
Here are the details of the applicable interest rates:
No.
Provisions of the Law
Rate Type
Interest Rate per Month (December 2024)
Interest Rate per Month (January 2025)
1 Article 19 paragraph (1), Article 19 paragraph (2), Article 19 paragraph (3) Administrative Sanctions
0,57%
0,58%
2 Article 8 paragraph (2), Article 8 paragraph (2a), Article 9 paragraph (2a), Article 9 paragraph (2b), Article 14 paragraph (3) Administrative Sanctions
0,99%
1,00%
3 Article 8 paragraph (5) Administrative Sanctions
1,40%
1,41%
4 Article 13 paragraph (2), Article 13 paragraph (2a) Administrative Sanctions
1,82%
1,83%
5 Article 13 paragraph (3b) Administrative Sanctions
2,24%
2,25%
6 Article 11 paragraph (3), Article 17B paragraph (3), Article 17B paragraph (4), Article 27B paragraph (4) Interest Fees
0,57%
0,58%
The new 2025 interest rates show a slight increase compared to the rates in December 2024. All interest rate categories, both for administrative sanctions and interest rewards, have increased by 0.01% per month.
Also Read: How to Apply for Interest Reward in DGT Coretax System (CTAS)
Explanation of Provisions in the KUP Law
Tax Administrative Sanctions
UU KUP regulates interest sanctions for various violations, among others:
Article 19
Article 19 paragraph (1): If the Surat Ketetapan Pajak Kurang Bayar (SKPKB), SKPKB Tambahan, or Surat Keputusan Pembetulan (SKP) is issued and causes the amount of tax to be paid to increase, the taxpayer is subject to interest sanctions based on the rates set by the Minister of Finance.
Article 19 paragraph (2): Taxpayers may apply for installments or postponement of tax payments subject to administrative sanctions of interest. This interest rate per month is calculated from the amount of tax still to be paid.
Article 19 paragraph (3): Taxpayers may also apply for postponement of the submission of Annual Tax Return (SPT) and temporary calculation of tax payable with interest sanction at the rate per month determined by the Minister of Finance.
Articles 8, 9, and 14
Article 8 paragraph (2): If the taxpayer corrects the tax return that causes the tax debt to increase, the taxpayer is subject to interest sanctions per month on the amount of tax underpaid.
Article 8 paragraph (2a): Taxpayers who make their own correction of Periodic Tax Return which causes the tax debt to be greater will be subject to administrative sanctions on the amount of tax underpaid.
Article 9 paragraph (2a): Late tax payments and deposits after the due date will be subject to interest administrative sanctions.
Article 9 paragraph (2b): Tax payments and deposits that are late after the due date for submitting the Annual Tax Return will be subject to interest sanctions.
Article 14 paragraph (3): The shortage of tax payable will also be added with interest sanctions per month.
Article 8 paragraph 5
Article 8 paragraph (5): Underpayment due to the disclosure of the untruth of filling out the SPT must be paid by the taxpayer along with the administrative sanctions before the report is submitted.
Article 13
Article 13 paragraph (2): Any tax deficiency owed will be subject to administrative sanctions in the form of interest calculated from the time it is payable or the end of the tax period.
Article 13 paragraph (2a): Any tax deficiency owed will be subject to administrative sanctions in the form of interest calculated from the due date of payment.
Article 13 paragraph (3b): The monthly interest rate is calculated from the time the tax is payable or the end of the tax period.
Tax Interest Rewards
Interest rewards are given to taxpayers for late refunds of overpaid taxes, as stipulated in:
Article 11
Article 11 paragraph (3): If the refund of tax overpayment is made for more than one month, the government is obliged to provide an interest reward according to the tax rate.
12 Percent VAT already levied? This is the government’s guarantee for consumers
The government is facing challenges in the implementation of the 12 percent Value Added Tax (VAT) increase policy. Although this rate only applies to luxury goods, some transactions in the field have already applied the rate to goods and services that are not categorized as luxury goods. To reduce the confusion, the government through the Directorate General of Taxes (DGT) ensures that the excess VAT that has been collected will be returned to consumers.
In a press conference at the DGT headquarters, Jakarta (2/1), Director General of Taxes, Suryo Utomo, stated that the government is committed to returning the excess tax collection to consumers. He explained that the state will not take rights that do not belong to it and will ensure that refunds are made with proper procedures.
Misapplication in the Field
Some services and goods that do not fall under the luxury category, such as Wi-Fi internet services and digital advertising services on e-commerce platforms, have applied the 12 percent VAT rate. This is due to inconsistencies in the policy announcement, which was only finalized one day before its implementation.
Suryo added that the DGT has met with businesses to evaluate this situation. During the meeting, it was found that there were differences in implementation in the field. Some businesses have used the correct rate, which is 11 percent for non-luxury goods, but there are also those who mistakenly apply the 12 percent rate.
Tax Refund Mechanism for Consumers and Entrepreneurs
Suryo explained that the tax refund mechanism for taxable entrepreneurs (PKP) is relatively easier than for end consumers. Entrepreneurs can apply for tax refunds, make tax invoice corrections, or credit excess VAT in the Annual Tax Return (SPT) reporting.
However, the refund process for end consumers is more complicated due to the nature of the transaction. In this case, the government is considering several options, including direct returns from entrepreneurs to consumers through a business-to-business (B2B) approach. The Director of Taxation Regulation, Hestu Yoga Saksama, said that entrepreneurs can return the excess levy to consumers and then submit tax compensation to the government.
Government Efforts to Develop a Refund Scheme
Expert Staff of the Minister of Finance for Tax Compliance, Yon Arsal, emphasized that the government is designing an effective refund mechanism. He hopes that a solution can be announced in the coming days so that the excess levies can be immediately returned to the rightful parties.
Yon is also optimistic that the case of 12 percent VAT collection outside luxury goods does not occur massively, so that the refund process can be carried out quickly and accurately.
Policy Inconsistency Triggers Confusion
The misapplication of the 12 percent VAT rate in the field cannot be separated from the uncertainty of the changing policies. Initially, the government announced a rate increase for all goods and services that are VAT objects in accordance with the Harmonization of Tax Regulations Law (HPP Law).
However, after criticism, the government decided that the increase would only apply to luxury goods. This decision changed again several times before finally being finalized on 31 December 2024, the day before the policy came into effect.
Quoting Kompas.id, according to Tax Consultant Raden Agus Suparman from Botax Consulting Indonesia, this inconsistency has caused confusion among entrepreneurs and consumers. He added that the government must clarify the refund mechanism so as not to cause harm to consumers.
Read also: Implementation of PMK 131/2024: New VAT Rates for Luxury Goods in 2025
VAT Refund Challenges for End Consumers
Raden also highlighted the difficulties faced by end consumers in obtaining tax refunds. Consumer transactions are usually final, making it difficult for them to claim a refund, especially if the purchased goods have already been used up.
He believes that the current tax restitution mechanism tends to be administratively complicated, so consumers may be reluctant to apply for a refund if the amount is small. For entrepreneurs, although this process is also not simple, tax compensation may be a more realistic alternative.
Next Steps for Restoration of Public Trust
To restore public trust, the government should immediately finalize the refund mechanism and provide clear guidance to businesses and consumers. In addition, the government also needs to improve the quality of policy socialization so that similar mistakes do not occur in the future.