Introduction of Core Tax Administration System (CTAS)

Regulatory Information:

Regulation: Peraturan Menteri Keuangan (PMK) Nomor 81 tahun 2024

Notification date: December 04, 2024

Source: https://www.pajak.go.id/reformdjp/coretax/template-xml-dan-converter-excel-ke-xml

Updates in Compliance:

Summary:

The Government of the Republic of Indonesia has introduced a remarkable change through introduction of Core Tax Administration System (CTAS) that enhances the tax reporting mechanism, ensuring a more efficient and unified reporting process.

Ministry of Finance has released the above regulation that provides guidelines on registration, remittance, and reporting, in CTAS ensuring a smoother transition for taxpayers. The summary of guidelines are as follows:

Effective Date: January 01, 2024

Features:
The new tax portal facilitates the taxpayers with following features:

• To file the tax reports electronically.
• To sign the tax reports on submission either by obtaining valid digital signature or through generation of code.
• To receive any communication from Director general of taxes (DGT) in the form of Notice for tax collection, underpayment, assessment refund
• Validation of Taxpayer identification number, Tax object code and corresponding tax rates are also made available

Registration:

• All the individuals are required to register using the new application with the tax office whose working area falling within the taxpayer’s residence or domicile.
• The DGT will also assess if the individual taxpayer has registered with the appropriate tax office.
• On registration the National identification number (NIK) will be activated as tax identification number in case of residents and 16-digit number will be generated by DGT in case of other nationals.

Remittance:

• The tax remittances are carried out through electronic payment channels through tax payment slip, on remittance state revenue receipt will be generated that serves as valid payment proof.
• The payroll tax needs to be remitted by not later than 15^thof the following month

Reporting:

Employers are obliged to file electronically Periodic Article 21/26 income tax returns. On submission proof of receipt will be provided by DGT.

Technical Format:

The CTAS system replaces previous excel upload files with XML along with the XML convertor functionality. For technical instructions on the updated electronic reporting channels and report formats refer to the regulation in source link.

Our Analysis:

The implementation of CTAS marks a significant shift in Indonesia’s tax administration, streamlining compliance and enhancing efficiency. By standardising electronic filings and tax payment deadlines, businesses can expect smoother tax compliance and reduced administrative burdens.

The automation of tax refunds can improve cash flow, while an integrated system ensures seamless interaction between employers and authorities. However, the transition requires system upgrades, staff training, and cybersecurity measures to safeguard sensitive data. While challenges exist, this modernization ultimately creates a more transparent and efficient payroll ecosystem for both employers and employees.