INDONESIA: Indonesia’s tax authorities are turning to a familiar playbook—but with far more urgency—as the year draws to a close and state coffers come up short.
Facing a widening budget gap and a deficit inching toward the government’s 3% of gross domestic product (GDP) limit, officials have begun knocking on the doors of the country’s wealthiest individuals and biggest businesses. Some high-profile taxpayers have been called in to recheck their filings, while several large, family-owned companies have been asked to top up their payments, in some cases by more than US$5 million (S$6.75 million).
Tax officials insist the approach is routine. The Directorate General of Tax says it regularly reviews large taxpayers to clarify data and ensure compliance, stressing that any corrections must be legally grounded and that taxpayers can contest them if they disagree.
Still, among business circles, the annual end-of-year push is well known—and often dreaded. Critics have long dubbed it “hunting in a zoo,” a shorthand for a strategy that zeroes in on a relatively small, easy-to-monitor group of big, formal taxpayers, rather than tackling Indonesia’s vast and complex informal economy.
What makes this year different is the scale of the problem. By the end of November, tax receipts had reached just 79% of a target that had already been lowered, well below last year’s pace. It’s a sharp break from recent years, when revenues comfortably beat expectations.
“This year, it’s clearly more aggressive,” said Wijayanto Samirin, an economist at Paramadina University in Jakarta.
A softer economy and falling commodity prices have taken a toll, pushing Indonesia’s projected budget deficit to around 2.78% of GDP—its highest level in two decades outside the pandemic. For officials under pressure to close the gap, the clock is ticking.
“These last-minute efforts happen almost every year,” said Kevin O’Rourke, a Jakarta-based consultant. “But given how big the shortfall is, it’s not surprising they feel more forceful this time.”
In the past, some taxpayers have chosen to pay first and argue later—settling up before year-end, then filing appeals or refund claims in the months that follow.
This year’s drive is also heightening unease among Indonesia’s wealthy, many of whom already feel they are under a brighter spotlight since President Prabowo Subianto took office. The country is home to some of Southeast Asia’s richest billionaires, with the top 10 alone worth more than $180 billion.
Earlier this year, the government urged tycoons to support the state by buying Patriot Bonds with below-market returns and moved to reclaim millions of hectares of land it says were illegally controlled, including plantations linked to wealthy owners.
For some affluent families, the mood is a mix of frustration and anxiety. Even those unhappy with the pressure often feel they have little room to push back, worried about the consequences of saying ‘no’.
Indonesia’s low tax ratio—around 10% of GDP—has long been a sore point for policymakers. Hashim Djojohadikusumo, the president’s brother and a key adviser, has openly criticised the system as weak and slow to reform.
The Finance Ministry says it is trying to change that, rolling out a new online tax platform and tapping more third-party data. Authorities are also chasing major tax evasion cases, with officials estimating tens of trillions of rupiah still unpaid. So far, only a fraction has been recovered.
But experts caution that pushing too hard could come at a cost. Heavy-handed tactics risk undermining trust in the tax system, said Fajry Akbar of the Center for Indonesia Taxation Analysis. If big industries feel unethically besieged, he warned, they may falter before advancing with their investments or growing their businesses in Indonesia—a consequence that the government cannot afford.
