Tax Underpayment Interest Penalty: How It Is Calculated
Underpaying tax triggers a monthly interest penalty: benchmark rate + uplift, divided by 12. Understand the HPP Law rates, lighter than the old rules.
After late filing, another tax case that frequently occurs is underpaying tax—remitting less than what is actually owed. The consequence is not a fixed fine but a monthly interest penalty. Since the Tax Regulation Harmonization Law (UU HPP), the calculation has changed and is generally lighter than the old rules.
Old vs new
Under the old UU KUP, penalties were flat: 2% interest per month, or even 50%–100% on audit results. UU HPP replaced this with a rate that follows the Bank Indonesia benchmark rate, making it more proportional.
The HPP Law interest formula
The monthly interest rate is calculated as:
(Benchmark rate + uplift) ÷ 12
The uplift (additional penalty) depends on the type of error—the more deliberate, the higher:
- 0% — underpayment due to a deferred/extended annual return.
- 5% — writing or calculation errors, and current-year income tax.
- 10% — voluntary disclosure of an inaccuracy.
- 15% — a discrepancy disclosed after an audit has begun.
- 20% — audit results: underpaid income tax or under-withheld/under-collected tax.
The interest penalty is generally capped at 24 months. Because the benchmark rate changes, the penalty amount follows conditions at the time the tax debt arose.
A simple example
Suppose the benchmark rate is 6% and the error carries a 5% uplift, so the monthly rate = (6% + 5%) ÷ 12 ≈ 0.92% per month. On an underpayment of Rp50 million over 6 months, the interest penalty ≈ Rp50 million × 0.92% × 6 ≈ Rp2.76 million—on top of the tax principal that still must be paid.
How to avoid it
- Calculate and remit tax at its true value from the start.
- Recheck the tax base, rates, and tax credits before filing.
- If an error already occurred, file a correction quickly—the uplift for voluntary disclosure is lower than after an audit.
- Use professional support to minimize correction risk.
The Mandiri Pajak team helps with tax planning and reporting so your remittance is accurate and free of interest penalties. Talk to us today.