The Indonesian government is intensifying efforts to combat under-invoicing in import transactions, which severely erodes state revenue. The Minister of Finance recently stated at the Coordinating Ministry for Economic Affairs office in Jakarta that tax authorities have discovered multiple companies engaging in under-invoicing and are vigorously pursuing investigations. He pointed out that import under-invoicing occurs when companies declare transaction amounts lower than the actual price, leading to a significant reduction in tax revenue that should be collected. In preliminary spot checks, the government found that the problem was widespread: out of 10 companies inspected, all were found to have under-invoiced, indicating very clear signs of violation. The Ministry of Finance is still detailing the specific losses caused by such practices and expects to release final data only after a thorough review.
He stated that rectifying import price violations aims to effectively increase state revenue. Meanwhile, the government continues to improve the tax system to plug loopholes that cause revenue leakage. He revealed that tax management and regulatory reforms have shown results since the beginning of the year: tax revenue in the first two months increased by about 30% year-on-year, with VAT and luxury goods sales tax surging by 95%, reflecting a strong economic recovery. He emphasized that the increase in national income relies not only on new policies but also on strict investigations into various violations that erode public finances.
Regarding the state budget deficit, he clearly stated that under the current economic conditions, the government will not choose to expand the deficit. As long as the economy remains normal, the 3% deficit-to-GDP ceiling will be strictly adhered to, and only in a crisis would relaxation be considered. He believes that Indonesia's current economic fundamentals are stable, economic activities are normal, and government spending is orderly, so there is no reason to relax the deficit limit. The government will prioritize maintaining fiscal health; if budget pressure increases, it will respond through cost-cutting and efficiency improvements across departments.
Recently, due to uncertainties such as rising global oil prices and fluctuations in the Indonesian rupiah exchange rate, discussions have emerged in Indonesia about whether to relax the deficit ceiling. However, many economists believe that Indonesia's current fiscal position is already fragile and that expanding the deficit is not advisable. Data shows that the Indonesian government's debt-to-GDP ratio has risen from about 30% in 2019 to about 40% in 2025, and the proportion of debt interest payments to national income continues to climb, testing fiscal resilience.
Indonesia Cracks Down on Import Under-Invoicing and Tax Evasion, Rectifies Import Violations
2026-03-18
Source
The Indonesian government is intensifying efforts to combat under-invoicing in import transactions, which severely erodes state revenue. The Minister of Finance recently stated at the Coordinating Ministry for Economic Affairs office in Jakarta that tax authorities have discovered multiple companies engaging in under-invoicing and are vigorously pursuing investigations. He pointed out that import under-invoicing occurs when companies declare transaction amounts lower than the actual price.
The Indonesian government is intensifying efforts to combat under-invoicing in import transactions, which severely erodes state revenue. The Minister of Finance recently stated at the Coordinating Ministry for Economic Affairs office in Jakarta that tax authorities have discovered multiple companies engaging in under-invoicing and are vigorously pursuing investigations. He pointed out that import under-invoicing occurs when companies declare transaction amounts lower than the actual price, leading to a significant reduction in tax revenue that should be collected. In preliminary spot checks, the government found that the problem was widespread: out of 10 companies inspected, all were found to have under-invoiced, indicating very clear signs of violation. The Ministry of Finance is still detailing the specific losses caused by such practices and expects to release final data only after a thorough review.
He stated that rectifying import price violations aims to effectively increase state revenue. Meanwhile, the government continues to improve the tax system to plug loopholes that cause revenue leakage. He revealed that tax management and regulatory reforms have shown results since the beginning of the year: tax revenue in the first two months increased by about 30% year-on-year, with VAT and luxury goods sales tax surging by 95%, reflecting a strong economic recovery. He emphasized that the increase in national income relies not only on new policies but also on strict investigations into various violations that erode public finances.
Regarding the state budget deficit, he clearly stated that under the current economic conditions, the government will not choose to expand the deficit. As long as the economy remains normal, the 3% deficit-to-GDP ceiling will be strictly adhered to, and only in a crisis would relaxation be considered. He believes that Indonesia's current economic fundamentals are stable, economic activities are normal, and government spending is orderly, so there is no reason to relax the deficit limit. The government will prioritize maintaining fiscal health; if budget pressure increases, it will respond through cost-cutting and efficiency improvements across departments.
Recently, due to uncertainties such as rising global oil prices and fluctuations in the Indonesian rupiah exchange rate, discussions have emerged in Indonesia about whether to relax the deficit ceiling. However, many economists believe that Indonesia's current fiscal position is already fragile and that expanding the deficit is not advisable. Data shows that the Indonesian government's debt-to-GDP ratio has risen from about 30% in 2019 to about 40% in 2025, and the proportion of debt interest payments to national income continues to climb, testing fiscal resilience.
