PMK 118 Tahun 2024 (MoFR 118/2024): Consolidation of Tax Administration Provisions

PMK 118 Tahun 2024 (Minister of Finance Regulation Number 118 of 2024, or MoFR 118/2024) consolidates Indonesia’s rules on tax rectification, objection, reduction, revocation, and cancellation into one regulation. It requires applications to be filed electronically through the Taxpayer Portal, sets fixed response deadlines for the Directorate General of Taxes (DGT), and introduces the Statement Letter for taxpayers who cannot provide requested documents.

What Is PMK 118 Tahun 2024?

PMK 118 Tahun 2024 is the Minister of Finance Regulation that updates and consolidates the previous regulations on Rectification, Objection, Reduction, Revocation, and Cancellation in the field of taxation.

The regulation has three stated aims:

• To provide fairness and legal certainty for taxpayers.
• To enhance the effectiveness, efficiency, improvement, and alignment of the Sistem Inti Administrasi Perpajakan (PSIAP) implementation.
• To cover the various types of taxes under the authority of the central government, including Land and Building Tax (PBB).

Under MoFR 118/2024, applications for rectification, objection, reduction, revocation, and cancellation follow the flows described below.

How Does the Rectification Procedure Work Under PMK 118 Tahun 2024?

A rectification application under MoFR 118/2024 is settled within 6 months, and an application that does not meet the requirements is returned within 1 month. The regulation adds new provisions for applications filed by taxpayers and for rectification carried out by the DGT due to its function.

Rectification Process Step by Step

How Does the Tax Objection Procedure Work Under PMK 118 Tahun 2024?

A tax objection (keberatan pajak) under MoFR 118/2024 is settled within 12 months, and an objection that does not meet the requirements receives a notification letter within 1 month. The regulation adds provisions on information requests, additional examination, and statement letters.

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Objection Process Step by Step

How Do Reduction, Revocation, and Cancellation Applications Work?

Applications for Reduction, Elimination, and Cancellation in the field of taxation under MoFR 118/2024 are settled within 6 months, whether submitted by the taxpayer or initiated ex officio by the DGT. An application that does not meet the requirements is returned with an Application Return Letter within 1 month.

Reduction, Revocation, and Cancellation Process Step by Step

What Changed Compared With Previous Regulations?

MoFR 118/2024 refines the earlier provisions: the deadline to return a non-compliant rectification application is shortened to 1 month, the objection sanction falls from 50% to 30%, and a Statement Letter replaces the DGT’s official report when taxpayers cannot provide requested documents.

Which Documents Are Considered in a Land and Building Tax Objection?

Under MoFR 118/2024, documents requested during a tax audit but not submitted are not considered in a Land and Building Tax objection, unless a third party held them. This harmonizes a matter that was not clearly regulated in MoFR 253/PMK.03/2014 jo. MoFR 249/PMK.03/2016.

How Is an Application Revoked Under MoFR 118/2024?

The DGT must issue a revocation acceptance or refusal letter no later than 10 working days from receipt of the revocation request (Articles 55 to 57 of MoFR 118/2024). The regulation sets out the requirements for a revocation application. A revocation letter that does not meet those requirements is not considered.

What Are the Benefits of PMK 118 Tahun 2024 for Taxpayers?

MoFR 118/2024 benefits taxpayers through certainty, fairness, and simplification of previous regulations. Its positive impact falls into four areas:

1. Legal certainty for taxpayers. The regulation sets timeframes for issuing Application Return Letters, Basic Information Letters for Rejection, Acceptance or Refusal of Revocation of Application, and decisions issued after the assessment deadline has passed. Taxpayers can measure the timeline of their submitted applications.
2. Fairness to taxpayers. Fairness is reinforced through transparency, as applications can be accessed through the Taxpayer Portal. Taxpayers are legally entitled to information on the status, progress, and outcome of their applications.
3. More effective and efficient submission. Electronic uploading in the Taxpayer Portal is prioritized over submission by post, expedition, or courier services.
4. Extension of the filing object. Documents that were not explicitly regulated before can now be submitted, such as the cancellation of Tax Collection Letters (STP) due to miscalculation or procedural errors.

What Should Taxpayers Consider When Filing Applications Under MoFR 118/2024?

Taxpayers should choose their dispute resolution route carefully, prepare documents early, and monitor applications actively. These three points shape how applications should be strategized:

1. Determine the most suitable strategic approach. Taxpayers need to understand the resolution mechanism for their tax issue, including the scope and potential impact of the application. For example, MoFR 118/2024 requires taxpayers to choose one option: filing an objection or initiating a Mutual Agreement Procedure (MAP). Because the two cannot be pursued simultaneously, the choice has a major influence on the effectiveness of dispute resolution.
2. Prepare supporting documents properly. Ensure all relevant documents are ready at an early stage, especially during tax audit and objection. If the taxpayer does not have some or all documents requested by the DGT, a Statement Letter must be submitted as formal acknowledgment. This letter becomes written evidence that the taxpayer could not fulfill the request, and it can be used in the dispute process in a way that potentially disadvantages the taxpayer.
3. Monitor and follow up applications periodically. With electronic processing and greater transparency, taxpayers should actively monitor the status of their requests and prepare further steps to mitigate potential risks.

Frequently Asked Questions About PMK 118 Tahun 2024