Overview of the New Regulation
The Indonesian government, through Keputusan Menteri Keuangan (KMK) No. 40/MK/EF.2/2026, effective 1 September 2026, updated the monthly interest rates used for calculating administrative penalties (sanksi administratif) and interest paid as refunds (or “rebates”) in tax law. (stats.pajak.go.id) Rates vary depending on which paragraph of the law is applicable.
Specific Rates & Legal Provisions
| Legal Provision | Function | New Monthly Rate |
|---|---|---|
| Pasal 19 ayat (1-3) | Late tax payments, etc. | 0.60% |
| Pasal 8 ayat (2,2a), 9(2a,2b), 14(3) | Late filings or corrections | 1.02% |
| Pasal 8 ayat (5) | Certain tax base adjustment delays | 1.43% |
| Pasal 13 ayat (2,2a) | Disallowed/taxable income adjustments | 1.85% |
| Pasal 13 ayat (3b) | Severe defaults or missing documents | 2.27% |
| Imbalan Bunga (refunds, overpayments etc.) per certain articles | Refunds owed to taxpayer | 0.60% |
What This Means in Practice
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For businesses: Late filings, underreported income, missing documentation can lead to significantly higher monthly penalties. For instance, missing documents causing a Pasal 13(3b) violation brings you into the highest bracket at 2.27% per month.
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For individuals: If you're due a refund under qualifying provisions, expect 0.60% per month interest until settlement.
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Implications for cash flow: Penalty interest compounds; even small delays can balloon. If your business projects earnings or refunds, revise your timelines in light of these updated rates.
Actionable Advice
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Prioritize meeting deadline obligations: filings, payments, documentation completeness.
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For contestable adjustments (e.g., income adjustments), negotiate or apply remedies early to avoid being placed in higher interest tiers.
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Ensure accurate forecasts and provision for penalties in financial statements—especially during audit exposure periods.
Conclusion: Indonesia’s August 2026 decree underscores stricter penalties for delayed compliance and strengthens incentive for prompt action. Taxpayers should update internal policies to account for higher financial risks associated with non-compliance.