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This paper aims to examine the effect of PP23/2018 implementation towards tax compliance of Small Medium Enterprise (SME) in Semarang City. Variable PP 23 Implementation were proxied by tax understanding and sanctions. The paper opted for a quantitative study by using primary data. The data were collected by using questionnaire and analysed using multiple regression. SPSS software was used to analyse the data while sample was chosen by random sampling technique. The population of this study is Small Medium Enterprise in Semarang, especially Course and Training Institution. Samples amounted to 155 are valid and reliable to be analysed further. The paper shows that the implementation of PP23/2018 in Indonesia affects tax compliance of SMEs. It suggests that understanding of new regulation and sanction positively affect tax compliance among SMEs. Because of the chosen research approach, the research result is specific and may lack of generalizability. Therefore, researchers are encouraged to test the proposed hypothesis to other objects. The paper includes implications for the tax regulator in implementing new regulation affected SMEs in the future.