Tax crimes are a blight on the tax system of any country in the world. Such is also the case in Indonesia, where the government and tax authorities have put forth much effort to combat the scourge of tax evasion and other tax crimes which are frequently committed across the country.

Tax Crimes in Indonesia


The Indonesian legal system is based on the civil law model. In Indonesia, all existing laws and regulations have been codified for the purposes of enforcement. The taxation laws of Indonesia are a subset of the national laws. Article 23A of the Constitution of the Republic of Indonesia of 1945 states that “taxes and other compulsory levies required for the needs of the state are to be regulated by law”.

Every taxation law in Indonesia explicitly states what is legally permitted with regard to taxation. Each taxation law is also related to further implementing regulations which may have been created by the government, Ministry of Finance, and Director General of Tax (DGT). Implementing regulations related to local taxes are found in the Regional Government Regulation as well as the Governor or Regency Head Regulation. DGT (circular) letters contain tax-related information which are not part of the official tax laws of Indonesia. However, most tax officials in Indonesia generally abide by the information stated in DGT letters.


Laws that Govern Taxation in Indonesia

Indonesian taxation laws are primarily based on Article 23A of the 1945 Indonesian Constitution. Article 23A states that tax is an enforceable contribution to be imposed on all Indonesian citizens, foreign nationals, and residents who have been residing in Indonesia for 183 cumulative days within a 12-month period or have been there for at least one day and have an intent to remain in Indonesia.

In most cases, those who are in Indonesia for fewer than 120 days over a 12-month period do not owe any tax money except for taxed imposed on income sourced from Indonesia. However, certain tax treaties may supersede this taxation. Tax treaties deal with taxation of foreign-sourced income for services provided in Indonesia. Such income is generally taxed if the related services have been performed for 120 days or more; however, the exact details of the applicable tax treaty will determine how the taxation will be imposed.

Indonesian laws regarding taxation may refer to income tax, local tax, or central government tax.


Indonesian Taxation Laws

The following are the most important taxation laws in Indonesia:


  • General Provisions and Taxation Procedures Law “Undang-undang Ketentuan Umum dan Tatacara Perpajakan/UU KUP” Law No. 6/1983, amended by Law no.16/2009
  • Income Tax Law (“Undang-undang Pajak Penghasilan/UU PPh”: Law Number 7 of 1983, amended by Law No. 17/2000; amended by law No 36/2008
  • Value Added Tax VAT termed ‘Goods and Services and Sales Tax on Luxury Goods’ (“Undang-undang Pajak Pertambahan Nilai atas Barang dan Jasa dan Pajak Penjualan atas Barang Mewah”/UU PPN and PPn BM ): Law No. 8/1983, amended I by Law No. 11/2000, amended II by Law No. 18/2004, Last amended by Law No. 42/2009
  • Land Tax and Building Tax (“Undang-undang Pajak Bumi dan Bangunan – UU PBB”): Law No. 12/1985 amended by Law No. 12/1994
  • Warrant for Tax Collection (“Undang-undang Penagihan Pajak dengan Surat Paksa/UU PPSP”) Law No. 19/1997, amended by Law No. 19/2000
  • Fees for Acquisition of Rights to Lands and Buildings (“Undang-undang Bea Perolehan Hak atas Tanah dan Bangunan/UU BPHTB”) Law No. 21/1997 amended by Law No. 20/2000. Not valid after Local Tax and User Charges Law is applied
  • Tax Court Law (“Undang-undang Pengadilan Pajak/UU PP”): Law No. 14/2002
  • Stamp Duty (“Undang-undang Bea Meterai/UU BM”) also known as Law Number 13 of 1985
  • Local Tax and User Charges Law (“Undang-undang Pajak Daerah dan retribusi Daerah”) also known as Law Number 28 of 2009


According to Indonesia’s civil law system, the tax court is a branch of the administrative court. However, the tax court and administrative court are not one and the same; the two courts are separate. Many cases in the administrative court, however, are related to tax disputes. Tax disputes are defined as disputes related to taxation between the taxpayer and public officials with regard to a specific tax-related issue. Tax disputes are generally under the jurisdiction of the tax court. However, if the case has any indication of criminal activity, the case will be decided by the district court should any criminal proceedings be required.

Certain tax-related objections are to be brought before the administrative court instead of the tax court. These include objections to an asset’s revaluation, objections to a merger’s having been filed with a book value, objections to registration as a taxable entrepreneur, and objections to the regulations or policies of the tax office or the Directorate General of Tax.