Indonesia is ramping up scrutiny of wealthy individuals and major corporations in an effort to plug an unusually large tax revenue shortfall ahead of year-end, raising anxiety among the country’s business elite and underscoring the strain on public finances.
Tax officials have summoned high-net-worth individuals and large, often family-run companies to review their tax filings, with some firms asked to pay millions of dollars in additional dues, according to people familiar with the matter. In several cases, when companies resisted the demands, officials proposed a compromise in which taxpayers would pay about 30% of the amount requested, without publicly explaining how the figure was calculated. The discussions are sensitive, and those involved declined to be identified.
The push comes as Indonesia’s budget deficit projection edges closer to the legal cap of 3% of gross domestic product, following a year of unusually weak tax receipts in Southeast Asia’s largest economy. Bloomberg data show that tax collection through November reached just 79% of an already reduced full-year target, down sharply from nearly 90% at the same point last year. In the previous three years, Indonesia exceeded its annual tax goals.
Bimo Wijayanto, director general of taxes at the Finance Ministry, confirmed that high-wealth taxpayers have recently been summoned, describing the move as part of a routine effort to clarify data and ensure compliance. He said the ministry’s information on taxpayers is becoming increasingly comprehensive and that the summons give taxpayers an opportunity to explain discrepancies or voluntarily correct their returns. Officials have not disclosed how many individuals or businesses have been contacted.
A spokesperson for the Directorate General of Tax said the authority routinely monitors large taxpayers and that any tax corrections are based on clear grounds, with taxpayers retaining the right to respond or pursue legal remedies. Still, several people familiar with the situation said the latest drive has extended beyond corporations to include white-collar professionals, with investigators auditing returns for possible errors.
Year-end efforts to boost tax revenue are not new in Indonesia, where critics have long described the practice as “hunting in a zoo,” a reference to targeting a small pool of large, formal taxpayers rather than broadening compliance across the vast informal economy. What sets this year apart is the scale of the shortfall and the increasingly assertive tone of enforcement. “Definitely, it is more aggressive,” said Wijayanto Samirin, an economist at Paramadina University in Jakarta.
Economists say weak economic conditions and softer commodity prices have weighed on tax collection, pushing the budget deficit forecast to about 2.78% of GDP, the highest level in two decades outside the pandemic years, according to Bloomberg data going back to 2005. Kevin O’Rourke of Jakarta-based consultancy Reformasi Information Services said last-minute drives to close revenue gaps are common, but the current shortfall helps explain why this year’s push appears particularly forceful.
The tax campaign is adding to unease among affluent Indonesians already unsettled by policies under President Prabowo Subianto that are widely seen as tightening pressure on the wealthy. Earlier this year, the government urged top tycoons to buy so-called Patriot Bonds with below-market returns to support investments by the new sovereign wealth fund, Danantara. The administration has also moved to confiscate millions of hectares of land it says are illegally held, including palm oil and forest concessions linked to wealthy landowners.
Indonesia is home to some of Southeast Asia’s richest billionaires, with the country’s 10 wealthiest individuals controlling a combined net worth exceeding $180 billion. While some high-net-worth families are frustrated by the tax office’s approach, many feel they have little choice but to comply, fearing repercussions if they resist, people familiar with the situation said.
The pressure highlights long-standing weaknesses in Indonesia’s tax system. The country’s tax ratio stood at about 10% of GDP last year, among the lowest globally. Hashim Djojohadikusumo, the president’s brother and a close adviser, has publicly criticized the system for failing to improve meaningfully over the past decade.
The Finance Ministry has been trying to address those gaps by rolling out a new online tax system this year and expanding the use of third-party data. In September, Finance Minister Purbaya Yudhi Sadewa said authorities were pursuing around 200 tax evasion cases involving roughly 60 trillion rupiah, or $3.6 billion, in arrears, most of it owed by companies. About 13 trillion rupiah has been collected so far.
Some analysts warn that pushing too hard could backfire. Fajry Akbar, head of tax research at the Center for Indonesia Taxation Analysis, said aggressive tactics risk eroding trust in the tax authority and undermining future compliance. Large conglomerates, he added, may think twice about investing or expanding in Indonesia if they believe enforcement is arbitrary or unfair.
