BERITA TERKINI
JAKARTA, DDTCNews - The Directorate General of Taxes (DGT) is placing heightened focus on the compliance of wealthy taxpayers, commonly referred to as high-wealth individuals (HWIs).
Assistant to the Minister of Finance for Tax Supervision Affairs, Nufransa Wira Sakti, stated that the DGT has been mapping various modes of tax non-compliance employed by HWIs.
“HWIs have extraordinary capacity for tax planning, whether through consultants or on their own,” he remarked during a Taxcussion titled Finding the Golden Formula: Strategies to Increase Indonesia’s Tax Ratio, organised by the Research and Literature Division of the Fiscal Administration Student Association, Universitas Indonesia (Kelompok Studi Administrasi Fiskal Universitas Indonesia/Kostaf UI in Indonesian), on Saturday (21/6/2025).
Examples of strategies used by HWIs to minimise tax payable include obtaining loans from affiliates overseas, transferring shares offshore as well through the provision of grants to parties with family relationships by blood/ marriage.
“We are attempting to map all these HWI schemes. The challenge is that these practices are inherently global. As such, we must collaborate with foreign tax authorities,” Nufransa added.
In general, information declared by taxpayers, including HWI taxpayers, in their tax returns is deemed accurate, insofar as no comparable data exists, stating that the information in the tax returns is incorrect.
Accordingly, information in the tax returns is cross-checked against information received by the DGT from government agencies, institutions, associations and other parties (instansi pemerintah, lembaga, asosiasi, dan pihak lain/ILAP in Indonesian) as well as from tax treaty partners through the automatic exchange of information (AEOI).
In several cases, the DGT has successfully secured additional tax revenues by leveraging AEOI data received from tax treaty partners.
“Frankly, there have been cases where we matched the data, and the taxpayer eventually acknowledged it and paid. Of course, we cannot disclose any identity, but enforcement has been implemented,” Nufransa noted.
At the same event, Director of DDTC Fiscal Research and Advisory, B. Bawono Kristiaji, highlighted that AEOI has significantly improved HWI compliance in declaring assets and paying taxes on their income in their respective jurisdictions.
Prior to the implementation of AEOI, approximately 90% of global offshore wealth was not declared by HWIs in their tax returns. With AEOI in place, the share of undisclosed offshore wealth is estimated to have declined to around 37%.
Offshore wealth refers to assets held by individuals in jurisdictions outside their country of residence.
“This implies that AEOI is effective in compelling HWIs to file, declare and become more compliant with their tax obligations,” Bawono explained.
Nevertheless, AEOI alone does not automatically resolve all challenges in taxing HWI income. These challenges are particularly acute in countries characterised by high inequality and weaker democratic systems.
“When we talk about politically exposed persons and how wealthy individuals may be immune from audits, this is frequently observed in parts of Latin America, where inequality and oligarchic structures intersect with HWI taxation issues,” he added.
Turning to Indonesia, Bawono noted that most income derived by HWIs is passive rather than active. The issue, however, is that much of this passive income is subject to final income tax.
“The wealthier an individual, the more their income tends to be passive. The question is whether our tax system can optimally tax them. My answer is no. As such, there is room for policy improvement,” he stated.
In addition, Indonesia could enhance HWI compliance by adopting cooperative compliance frameworks, which have proven effective in several jurisdictions.
“Such approaches have shown positive results in other countries,” Bawono concluded. (dik)
