Corporate Tax compliance Risk Management Post-PMK 111/2025: Equalization and SP2DK Response Strategy

Abstract

Tax authorities increasingly rely on data-driven supervision, in which taxpayer-reported information is cross-checked against third-party data and other available sources. This study examines the implications of Minister of Finance Regulation Number 111 of 2025 (PMK 111/2025) concerning Taxpayer Compliance Supervision for corporate tax compliance risk management, focusing on tax data reconciliation (equalization) and response strategies for Requests for Explanation of Data and/or Information (Surat Permintaan Penjelasan atas Data dan/atau Keterangan, SP2DK). The study employed a descriptive qualitative approach involving a comparative content analysis of regulatory provisions and illustrative simulations of three SP2DK response strategies. The comparative analysis examined PMK 111/2025, effective January 1, 2026, as the updated regulatory framework for taxpayer compliance supervision and compared its provisions with those of Directorate General of Taxes Circular Letter Number SE-05/PJ/2022, which provided earlier supervisory guidance. Simulations involving PT ABC assessed the estimated compliance costs associated with evidence-based clarification of identified discrepancies, comprehensive correction of reported discrepancies, and escalation to a tax audit. The findings indicate that systematic tax data reconciliation can serve as an early detection mechanism for identifying reporting inconsistencies, improving the accuracy of taxpayer clarifications, and ensuring that adjustments are limited to substantiated tax liabilities. The illustrative simulations demonstrated that evidence-based SP2DK responses supported by tax data reconciliation generated lower estimated compliance costs than comprehensive discrepancy corrections or escalation to a tax audit. The study recommends integrating routine tax data reconciliation and transaction documentation into corporate tax compliance controls and establishing standardized SP2DK response protocols that consider materiality, supporting evidence, potential tax penalties, and compliance costs.