Minister of Finance Regulation Number 28 of 2026 Reduces Tax Refund Thresholds and Tightens Overpayment Claims

Introduction

On 29 April 2026, the Ministry of Finance issued Minister of Finance Regulation Number 28 of 2026 on Procedures for Preliminary Refunds of Tax Overpayments (“MoF Reg. 28/2026”), which took effect on 1 May 2026. This regulation aims to refine the mechanism for preliminary refunds (accelerated refunds) of tax overpayments so that the process operates more accurately and provides stronger legal certainty for taxpayers.

The Government issued MoF Reg. 28/2026 because prior regulations have not adequately accommodated the need to adjust procedures and the ongoing digitalization of tax refunds. The Ministry of Finance considers it necessary to address misuse of facilities and mitigate risks of taxpayer non-compliance in claiming tax overpayments. In addition, the Government seeks to improve the administrative system through the integration of electronic portals, while tightening nominal claim thresholds to protect state revenues from improper disbursement of preliminary refunds.

 

Comparison

MoF Reg. 28/2026 revokes and replaces Minister of Finance Regulation Number 39/PMK.03/2018 of 2018 on Procedures for Preliminary Refunds of Tax Overpayments (“MoF Reg. 39/2018”) and its amendments (MoF Reg. 117/2019, MoF Reg. 209/2021, and MoF Reg. 119/2024). The following table compares MoF Reg. 28/2026 with MoF Reg. 39/2018 and its amendments:

 

Key Provisions

Financial Statement Requirements for Certain Criteria Taxpayers

Pursuant to Article 3 paragraph (5) of MoF Reg. 28/2026, taxpayers must demonstrate that their financial statements have obtained an unqualified opinion for three consecutive years and are not the result of restatement due to error corrections or data manipulation. In addition, MoF Reg. 28/2026 requires that taxpayers do not have fiscal profit/loss corrections exceeding 5% based on audit results and mandates that the auditing public accountant comply with a maximum engagement period of five years.

Reduction of Refund Ceiling for Certain Criteria Taxpayers

Based on Article 9 paragraph (2) of MoF Reg. 28/2026, the Ministry of Finance reduces the maximum ceiling for preliminary refund entitlements. Corporate Taxpayers are now only eligible to apply for accelerated refunds if they record business turnover of up to Rp50,000,000,000.00, with a maximum overpayment claim of Rp1,000,000,000.00. This regulation also limits PKP to utilize the preliminary refund facility only if their total supply value does not exceed Rp4,200,000,000.00 and the overpayment value does not exceed Rp1,000,000,000.00 in a given Tax Period.

Mandatory Digitalization of Refund Applications

Pursuant to Article 4 paragraph (1) and Article 14 paragraph (1) of MoF Reg. 28/2026, taxpayers and Low-Risk PKP are required to process applications for status determination electronically through the taxpayer portal. Applicants are no longer permitted to submit physical documents directly to the Tax Office, except where the taxpayer portal is experiencing technical issues or system disruptions. Article 4 paragraph (4) stipulates that the Director General of Taxes (“DGT”) must issue an approval or rejection decision within a maximum of 30 working days from the system’s confirmation of receipt of the electronic application.

Additional Requirements for Low-Risk PKP

Pursuant to Article 13 paragraph (2) letters f and g of MoF Reg. 28/2026, stricter licensing verification requirements apply to pharmaceutical distributors and medical device distributors. Pharmaceutical wholesalers and medical device distributors must attach essential legal documents within the tax portal, including:

1. Pharmaceutical distribution certificates or operational licenses for pharmaceutical wholesalers/medical device distributors; and 
2. Certificates of good distribution practices for medicines or medical devices in accordance with the provisions of the competent health authority. 

Assessment of Certain Activities for Low-Risk PKP

Article 16 regulates the examination mechanism conducted by the DGT for Low-Risk PKP. Article 16 paragraph (5) provides that Low-Risk PKP must demonstrate that they genuinely conduct certain activities (such as exports or supplies to VAT collectors) with a minimum percentage of 80% of their total supply and export value. If the PKP fails to meet this minimum 80% threshold in the relevant Tax Period, the DGT will not issue a Preliminary Tax Overpayment Refund Decree (SKPPKP).

Exclusion of Artificial Overpayments

Article 19 affirms that the DGT is entitled to reject preliminary refund applications if the reported overpayment does not constitute a valid tax overpayment. Article 19 paragraph (7) defines such artificial overpayments as including:

1. Differences arising from rounding in tax calculations within the administrative system. 
2. Overpayment values originating from income tax borne by the Government. 
3. Errors by taxpayers in reporting tax credits or withholding income tax. 

Authority to Revoke Status Unilaterally

Article 5 paragraph (2) of MoF Reg. 28/2026 stipulates that the DGT has the authority to revoke the status of Certain Criteria Taxpayers unilaterally in the event of compliance violations. The DGT will execute such revocation immediately if the taxpayer delays submission of the Annual Tax Return (SPT), fails to settle tax liabilities upon maturity, or is undergoing preliminary evidence examination or criminal investigation in the field of taxation.

 

Transitional Provisions

MoF Reg. 28/2026 regulates the transition of taxpayer status under Article 25, which annuls and invalidates all determinations of Certain Criteria Taxpayer status that still refer to previous regulations. Affected taxpayers may reapply through the electronic portal during the period from 1 June 2026 to 10 June 2026, allowing the DGT to reassess and redetermine their compliance status. However, the DGT will process refund applications submitted before 1 May 2026 using the new procedures under MoF Reg. 28/2026, provided that the Government has not yet issued a payment order.

As an exception, for preliminary refund applications of Certain Criteria Taxpayers and Low-Risk PKP that were already recorded in the system before this regulation took effect, the DGT will complete the process under the legal regime of MoF Reg. 39/2018 and its amendments.

 

Closing

MoF Reg. 28/2026 tightens the procedures for preliminary tax refunds to prevent misuse of facilities and safeguard state revenues through mandatory digitalization of applications via an electronic portal. This policy reduces the maximum refund claim threshold to Rp1,000,000,000.00 with lower turnover and supply value limits and imposes stricter financial reporting requirements without restatements resulting from manipulation. Furthermore, this regulation grants the DGT authority to reject artificial overpayment claims and to revoke taxpayer compliance status unilaterally, thereby requiring holders of prior status to reapply for reassessment.