Home Blog What to Expect in 2025 for the Core Tax Administration System Finance | Indonesia | Tax Reporting What to Expect in 2025 for the Core Tax Administration System InCorp Editorial Team 28 November 2024 6 reading time Table of Contents What is the Core Tax Administration System? What is Included in PMK-81? Administrative Mechanisms Under PMK-81 Why Do Businesses Need to Understand These Changes? Challenges and Solutions for Businesses Simplify Your Tax Transition with InCorp Indonesia’s tax administration system is undergoing a significant transformation with the introduction of the Core Tax Administration System (CTS), scheduled to launch on January 1, 2025. This groundbreaking reform is driven by Ministry of Finance (MoF) Regulation No. 81 Year 2024 (PMK-81/2024), issued on October 18, 2024. PMK-81 revokes 42 existing tax regulations and consolidates them into a unified framework, streamlining procedures and introducing digital-first mechanisms to modernize tax compliance. What is the Core Tax Administration System? The Core Tax Administration System (CTS) is a centralized, technology-driven framework to streamline Indonesia’s tax processes. It integrates functions such as registration, filing, payments, and refunds into a unified platform, replacing outdated manual processes with efficient digital systems. Key Objectives of the Core Tax System Reduce administrative burdens by automating routine tasks. Use advanced analytics to track and enforce tax obligations. Ensure taxpayers have real-time access to their tax data and status. Provide intuitive electronic channels for seamless interaction with the Directorate General of Taxes (DGT). By leveraging technology, the CTS supports Indonesia’s broader digital transformation goals, fostering trust and operational efficiency in tax administration. What is Included in PMK-81? PMK-81 establishes the regulatory framework for implementing the Core Tax Administration System. This framework addresses essential aspects of tax administration, from registration to refunds, and strongly emphasizes digital communication and standardized procedures. The new regulation encompasses all major tax categories, including Income Tax, Value-Added Tax (VAT), Luxury Goods Sales Tax (LST), Stamp Duty, Land and Building Tax (PBB), and Carbon Tax, providing a solid foundation for the Core Tax System. Tax TypeKey Provisions under PMK-81Digital Processes EnabledIncome TaxTaxpayer registration, payment deadlines, refund mechanismsElectronic filing, tax deposits, account updatesValue-Added Tax (VAT)VAT reporting, adjustments for e-Commerce VAT collectorsMonthly VAT returns, simplified templatesLuxury Goods Sales TaxRules for reporting and payment on taxable goods transactionsDigital submission, automated payment processesStamp DutyUse of prepayments and refund adjustmentsOnline tracking, overbookingLand & Building TaxCentralized reporting for multi-location businessesUnified Tax IDs, refund claimsCarbon TaxExtended deadlines for compliance with environmental policiesFiling extensions, digital correspondence Taxpayer Rights and Obligations PMK-81 standardizes the exercise of taxpayer rights, such as filing appeals and requesting refunds, while clearly defining obligations like timely filing and payments. These processes must now be conducted primarily through digital channels. Taxpayer Registration Businesses must register as taxpayers and, if applicable, as VATable Entrepreneurs (Pengusaha Kena Pajak/PKP). PMK-81 simplifies registration by mandating electronic submissions and real-time validation of taxpayer information. Payment and Refund Mechanisms PMK-81 introduces a tax deposit system, allowing taxpayers to prepay taxes and allocate unused funds to future liabilities or refunds. Key features include: Overpayments: Refund requests can be made for errors or excess payments. Interest Compensation: Taxpayers are entitled to interest on delayed refunds. Tax Returns and Reporting The regulation updates submission procedures for tax returns across all major categories. Notable changes include: Monthly VAT Reporting: Foreign e-commerce VAT collectors must now submit monthly returns instead of quarterly. Annual Tax Returns: Parent companies must provide consolidated financial reports in digital formats. Administrative Services The DGT offers centralized services for correspondence, such as tax assessment notifications and application updates. Communication is conducted through taxpayer accounts to ensure security and efficiency. Technical Provisions for Digital Systems PMK-81 mandates using electronic platforms for document submissions, correspondence, and decisions to support the Core Tax System. Starting January 1, 2025, electronic seals are required for all official documents. READ MORE:Indonesia Implements New Regulations for Withholding TaxWhat You Need to Know About Taxation of Benefits in KindGuide on Filing Corporate Annual Tax Return (SPT) in Indonesia Administrative Mechanisms Under PMK-81 PMK-81 introduces significant changes to tax administration, emphasizing digital platforms and updated procedural timelines. Implementation of Digital Channels Electronic platforms are now the default for most tax processes. Key channels include: Taxpayer Portals: Comprehensive systems for filing, payments, and communication. Integrated Applications and Webpages: Tools linked to DGT’s systems for seamless interaction. Contact Centers: Support hubs for resolving complex tax-related issues. Paper-based submissions are allowed only in cases where digital systems are unavailable due to infrastructure limitations or technical issues. Taxpayer Account Activation Taxpayer accounts are integral to the Core Tax System. Businesses must activate their accounts electronically or at a tax office with validated email and mobile phone details. These accounts serve as: A centralized hub for tax-related communication. A repository for documents such as tax assessment letters and filing confirmations. Submission and Receipt Dates PMK-81 clearly defines the rules for recognizing submission and receipt dates: For Taxpayers, the first submission recorded in the DGT system is valid when electronic and paper formats are used. For DGT: The date of electronic document dispatch is treated as the taxpayers’ receipt date. Refund and Overbooking Adjustments Refund procedures under PMK-81 include expanded eligibility for overpayments resulting from canceled tax assessments, administrative errors, or legal verdicts. Taxpayers can: Request refunds directly to their registered bank accounts. Allocate refunds to their tax deposit accounts for future liabilities. The regulation also categorizes overbooking into: Taxpayer-Initiated Overbooking: This is used to reallocate unused tax deposits or correct overpayments. Ex-Officio Overbooking: Conducted by DGT for errors or revoked taxpayer accounts. Businesses navigating these processes need not worry, as InCorp Indonesia is well-equipped to assist with compliance and ensure a seamless transition to the Core Tax System. Why Do Businesses Need to Understand These Changes? Adapting to the Core Tax System and PMK-81 is essential for businesses to avoid non-compliance risks and optimize their tax processes. Compliance with New Rules Understanding PMK-81 ensures that businesses: Meet updated deadlines for filing and payments. Leverage digital tools to manage tax obligations efficiently. Enhanced Financial Management Introducing tax deposit mechanisms and automated refunds improves cash flow and reduces financial uncertainty for businesses. Competitive Advantage Businesses that adapt quickly to the Core Tax System gain a competitive edge through streamlined operations and better resource allocation. Preparedness for Future Audits Centralized taxpayer accounts provide a complete digital trail of tax-related activities, simplifying audits and reducing disputes. Challenges and Solutions for Businesses While the Core Tax System offers significant benefits, businesses must address several challenges: Infrastructure Gaps Internet access in rural areas may help compliance. The government can address this through expanded digital infrastructure. Resistance to Change Businesses accustomed to legacy systems may need help transitioning. Training programs and awareness campaigns can ease this process. Cybersecurity Risks Increased reliance on digital platforms necessitates robust data protection measures. Businesses should invest in secure systems and adhere to best practices. Simplify Your Tax Transition with InCorp Navigating the changes brought by PMK-81 and the Core Tax Administration System can be complex, but InCorp offers expert solutions to ensure your business transitions seamlessly. Our comprehensive tax consultation and reporting services are designed to help you stay compliant and take advantage of the new system’s benefits. Our services include: Tax Consultation: Get professional advice tailored to your business needs, ensuring a clear understanding of PMK-81’s implications. Tax Reporting: Simplify electronic filings with our guidance, including VAT returns, annual tax submissions, and refund applications. Complete the form below to enhance tax compliance and minimize the risk of penalties for your business. Read Full Bio Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.