PMK 71/2026: Tax Debt Payments Now Go to the Principal First — What Does It Mean for Your Business?

The government has issued Minister of Finance Regulation (PMK) 71 of 2026, effective 2 October 2026. The key change is simple: every payment against a tax assessment (SKP) or tax collection notice (STP) now settles the tax principal first, and only then the administrative penalties. For businesses paying off tax arrears in stages, this means the principal is cleared sooner, and the route to requesting a penalty reduction opens earlier.

What is PMK 71/2026?

PMK 71/2026 amends PMK 118 of 2024 on procedures for corrections, objections, reductions, removals, and cancellations in taxation. It was signed on 29 September 2026, then promulgated and took effect on 2 October 2026.

The Directorate General of Taxes (DJP) says the aim is to speed up settlement of tax principal, encourage voluntary compliance, and protect taxpayers' cash flow, especially for MSMEs (UMKM).

What changed: principal first, penalties later

Under PMK 118/2024, payments against an SKP or STP were split proportionally between principal and penalties. Part of every payment always went to penalties, so the principal was never cleared first.

Now, Article 23(6) states that payments against an SKP, STP, SKP PBB, or STP PBB are credited first against the unpaid or underpaid tax. Any amount above the principal then goes to administrative penalties or PBB fines. The calculation follows the examples in Attachment C of the regulation.

Director General of Taxes Bimo Wijayanto stressed that this is not a tax amnesty. The principal must still be paid in full.

A simple example

These figures are an illustration only, not a real case. Say a small company (CV) receives an STP with Rp10,000,000 in principal and Rp2,000,000 in penalties (Rp12,000,000 in total). This month it can pay only Rp6,000,000.

• Old method (proportional): the Rp6,000,000 is split 10 : 2. About Rp5,000,000 goes to principal and Rp1,000,000 to penalties. Remaining principal: Rp5,000,000.
• New method (PMK 71/2026): the full Rp6,000,000 goes to principal. Remaining principal: Rp4,000,000; the Rp2,000,000 penalty is still outstanding.

Once the CV has paid Rp10,000,000 in total, its principal is fully settled. At that point it meets the condition to apply for a reduction or removal of the Rp2,000,000 penalty.

Who is affected?

• Taxpayers with outstanding SKPs or STPs paying in instalments — they benefit most.
• MSMEs with tight cash flow, since available funds can focus on clearing the principal.
• Taxpayers seeking a penalty reduction or removal, because the principal must be paid first.
• Taxpayers with objections in progress, due to adjusted response deadlines.
• Taxpayers with unpaid administrative penalties. New Article 27A lets DJP reduce or remove administrative penalties, including PBB fines, to support the national economy. It is implemented by KEP-239/PJ/2026 (effective 8 October 2026): relief of up to 100% if you file or pay by 31 December 2026, with applications due by 1 October 2028.

Requirements for a penalty reduction or removal

Relief is not automatic. The application must:

1. be written in Indonesian, stating the penalty amount requested and the reasons;
2. cover one SKP, STP, SKP PBB, or STP PBB only;
3. be filed before any proposal to auction or transfer seized goods;
4. be signed by the taxpayer, a representative, or an authorised agent;
5. be filed after the unpaid or underpaid tax principal has been paid.

The tax calculation and the amount requested must follow the Attachment C format. Penalties arising from objections, appeals, or judicial review (STPs under Article 25(9), Article 27(5d), and Article 27(5f) of the KUP Law) cannot be reduced or removed through this mechanism.

Changes to the objection process

• Taxpayers must meet DJP's data requests within 15 working days of the request letter.
• Taxpayers who do not attend the discussion of objection findings may still submit a written response within 10 working days of the notice to attend. After that, the review proceeds without their response.
• DJP's authority to exchange information with partner tax authorities is now stated explicitly.

Transitional rule: applications received before PMK 71/2026 took effect and not yet decided, concerning STPs under Article 25(9), Article 27(5d), or Article 27(5f) of the KUP Law, are still processed under PMK 118/2024.

What does it mean for your cash flow?

This change shapes how you plan repayments. Under proportional allocation, every payment also reduced penalties, so some principal always remained until the whole bill was paid. Under the new rule, you can aim to clear the principal first, then decide whether to pay the penalty or apply for a reduction.

A few practical points to consider:

• List each assessment separately. If you have several SKPs or STPs, record the principal and penalty for each. Since reduction applications are filed one at a time, a per-assessment payment plan is easier to track.
• Monitor status in Coretax. Make sure every payment is recorded against the right assessment before you apply.
• Prepare your reasons early. The application must state the penalty amount requested and why. Gather supporting documents while you settle the principal.

Summary: before and after PMK 71/2026

Steps you can take

1. Check your arrears — review unpaid SKPs and STPs in Coretax DJP.
2. Prioritise the principal — plan payments so each assessment's principal is cleared first.
3. Assess penalty relief — once the principal is paid, consider applying for a reduction or removal, one application per assessment.
4. Watch objection deadlines — provide data within 15 working days and responses within 10 working days.
5. Keep payment proof and records — applications must use the Attachment C calculation format.

Disclaimer: This article is general information as of 23 October 2026 and is not tax advice for any specific case. Tax rules may change at any time. For your situation, consult Sentary Consulting or a registered tax consultant.