Indonesia's Purbaya Probes Alleged Tax Evasion by Chinese-Owned Companies

Speaking to reporters at the Ministry of Finance in Jakarta on Thursday, January 8, 2026, Purbaya said the companies are active mainly in the steel and construction materials sectors.

According to him, many of these firms sell their products directly to clients on a cash basis without reporting transactions properly or paying value-added tax (VAT).

“The owners are from China, they have companies here, all Chinese nationals. They don’t speak Indonesian. They sell directly to clients, cash-based, and don’t pay VAT,” Purbaya said.

The finance minister warned that such tax evasion practices have inflicted substantial losses on the state. He said the ministry would move swiftly to crack down on the violations, noting that the potential revenue leakage is enormous.

“In steel alone, based on information from someone who has since come clean, the loss could exceed Rp4 trillion (around US$260 million) a year,” he said.

Beyond tax evasion, Purbaya also highlighted widespread underinvoicing practices in customs and excise. Underinvoicing occurs when exporters declare a lower value for goods than their actual worth to reduce taxes and duties.

He said several palm oil companies were found to have underreported export values by as much as half of their true value.

In response, the government plans to overhaul the performance and organizational structure of both the Directorate General of Taxes and the Directorate General of Customs and Excise. Purbaya said firm measures would be taken against officials or units that fail to improve.

“For Customs and Excise, the threat is very clear. If they cannot fix things within a year, then they will truly be sent home,” he said, using a phrase that signals dismissal or removal from duty.

Purbaya has previously warned that the Directorate General of Customs and Excise could face a temporary freeze if it does not promptly improve its performance and governance. At the same time, the Finance Ministry has already issued Regulation No. 117 of 2025 on restructuring the Directorate General of Taxes.

Under Finance Ministry Regulation (PMK) No. 117 of 2025, the reorganization of the tax office must be completed no later than December 31, 2026. The regulation states that the restructuring is necessary to ensure the stability of the core tax administration system and to meet the needs of stakeholders.

“To maintain the stability of the implementation of the core tax administration system at the Directorate General of Taxes in fulfilling stakeholder needs, organizational restructuring is required,” the regulation reads.

The government’s latest statements signal a tougher stance on tax compliance and customs enforcement, particularly involving foreign-owned companies operating in Indonesia.

The Finance Ministry has emphasized that strengthening oversight and institutional reform is crucial to protecting state revenues and ensuring a level playing field for businesses.