Indonesia Uncovers Alleged Tax Evasion Costing Trillions of Rupiah
Indonesia’s Finance Minister, Purbaya Yudhi Sadewa, has revealed that a number of foreign companies operating in the country — particularly Chinese-owned firms — have allegedly evaded tax obligations, causing substantial losses to the state budget.
Speaking at a press conference at the Ministry of Finance in Jakarta on January 8, 2026, Purbaya said the companies are largely engaged in the steel and construction materials sectors.
He explained that many of these businesses conduct direct, cash-based transactions with customers without properly recording sales or fulfilling their value-added tax (VAT) obligations.
“The owners are Chinese nationals, and the companies are fully owned by them. They do not speak the local language, transact directly with customers, operate on a cash basis, and avoid paying VAT,” Purbaya said.
The finance minister warned that such practices have inflicted significant damage on state finances and stressed that the government would take swift action to address the violations, given the scale of potential revenue losses.
“In the steel sector alone, based on information from an individual who has recently admitted to the practice, the annual loss could exceed Rp4 trillion, or around US$260 million,” he noted.
Beyond tax evasion, Purbaya also highlighted widespread underreporting in customs and excise declarations. Underreporting occurs when exporters declare the value of goods below their actual worth in order to reduce taxes and duties.
He added that several palm oil companies had been found to declare export values at nearly half of their true value.
In response, the government plans to overhaul both the Directorate General of Taxes and the Directorate General of Customs and Excise. Purbaya emphasized that firm measures would be taken against officials or units that fail to deliver substantial improvements.
“For Customs and Excise, the warning is very clear. If the issues are not resolved within one year, there will be consequences,” he said, using language that suggested possible dismissal from office.
Previously, Purbaya had warned that the Directorate General of Customs and Excise could face temporary suspension if it fails to urgently improve efficiency and governance. Meanwhile, the Finance Ministry has already issued Regulation №117 of 2025 concerning the reorganization of the Directorate General of Taxes.
Under Finance Ministry Regulation (PMK) №117 of 2025, the restructuring of the tax authority must be completed by December 31, 2026. The regulation states that the overhaul is necessary to maintain the stability of the core tax administration system and to meet stakeholders’ needs.
“To ensure the stability of the core tax administration system at the Directorate General of Taxes and to address stakeholders’ requirements, a reorganization is required,” the regulation states.
The latest government statements signal a tougher stance on tax compliance and customs enforcement, particularly toward foreign-owned businesses operating in Indonesia.
The Finance Ministry has underscored that stronger oversight and institutional reform are crucial to protecting state revenue and ensuring a level playing field for all businesses.
Source : https://en.tempo.co/read/2079424/indonesias-purbaya-probes-alleged-tax-evasion-by-chinese-owned-companies
