Finance Minister Purbaya Yudhi Sadewa has released two game-changing regulations that close international tax loopholes and significantly expand the physical authority of tax officers. Taxpayers now face dual scrutiny ranging from stricter international treaty documentation to the risk of unannounced business inspections. This era of forced transparency demands total compliance from business owners and cross-border investors alike.
Finance Minister Purbaya Yudhi Sadewa has taken aggressive steps by issuing Ministry of Finance Regulation (PMK) No. 112/2025, governing the implementation of the Double Taxation Avoidance Agreement (P3B/Tax Treaty) effective December 31, 2025. This regulation compels domestic taxpayers earning foreign income, and foreign taxpayers deriving income from Indonesia, to adhere to strict procedures designed to prevent the abuse of tax facilities.
The government has established absolute requirements for foreign taxpayers, including the mandatory submission of DGT forms validated by partner country authorities, as well as passing compliance checks such as the "principal purpose test" and "beneficial owner" verification.
The Directorate General of Taxes (DGT) now holds full control to test withholding tax compliance to prevent tax evasion practices that drain the state treasury. Although exemptions for DGT forms exist for specific entities like partner governments and central banks, surveillance over business entities is tightened through six prevention aspects, including share ownership periods and limitation on benefits. This regulation emphasizes that any attempt to reduce or delay tax payments contrary to the P3B's intent will be treated as serious abuse and will not be tolerated.
After sealing tax escape routes at the international level, Purbaya is sharpening the tax authority's "fangs" domestically through PMK No. 111/2025, which becomes effective on January 1, 2026. This policy grants legal authority for Account Representatives (AR) to conduct physical visits or raids on taxpayer business locations to photograph assets, interview employees, and perform location tagging (geotagging).
The supervision system is also shifting to digital channels, where Request for Explanation Letters (SP2DK) will be sent via email or tax accounts with a strict 14-day response deadline.
If taxpayers dare to ignore these digital "love letters" or provide false data, tax authorities have the right to unilaterally alter data or propose a preliminary evidence examination (bukper) that could lead to criminal charges. This sweeping regulation targets not only registered taxpayers but also hunts down subjects without a Tax ID (NPWP) who show indications of objective tax obligations.
This combination of digital surveillance and physical enforcement creates an ecosystem where compliance is no longer an option, but the only way to avoid severe sanctions.
The implications of these regulations force business players and investors to immediately tidy up their tax administration and ensure strong economic substance for every cross-border transaction. Operational risks have now increased as tax officers possess direct access to verify whether data on paper matches the reality on the ground, making it increasingly difficult to hide assets.
In conclusion, Purbaya's dual maneuver signals the end of the era of lenient supervision and the beginning of a proactive, uncompromising fiscal law enforcement regime to secure state revenue targets.
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