China Chamber of Commerce Flags Indonesia‘s Excessive Tax Audits
JAKARTA, DDTCNews - Chinese entrepreneurs in Indonesia organised under the China Chamber of Commerce in Indonesia have highlighted excessive tax audits. This topic is among the reviews in the national media today, Thursday (14/5/2026).
In a letter addressed to President Prabowo Subianto, the China Chamber of Commerce stated that Chinese companies operating in Indonesia still face a wide range of problems, including overly strict regulations, excessive law enforcement as well as extortion by the authorities.
"These issues are severely disrupting business operations, undermining long-term investment confidence and causing concern among Chinese companies," wrote the China Chamber of Commerce in its open letter.
The issues highlighted by the China Chamber of Commerce include, first, a substantial increase in taxes and levies. The China Chamber of Commerce specifically highlighted high mining and mineral royalties, increasing frequency of tax audits, and rising fines of up to tens of millions of US dollars, causing panic among Chinese companies in Indonesia. See Reconsidering Scare Tactics in the GPTP Law
Second, the government's plan to require exporters to place natural resource export proceeds (devisa hasil ekspor sumber daya alam/DHE SDA in Indonesian) in state-owned banks. This policy is considered likely to suppress company liquidity and long-term operations.
Third, a drastic reduction in nickel ore quotas. Mining quotas for nickel ore have been cut by 70%. This is viewed as disrupting the development of downstream industries, such as new renewable energy and stainless steel.
Fourth, excessive law enforcement through the Forest Area Control Task Force (Satuan Tugas Penertiban Kawasan Hutan/Satgas PKH in Indonesian). The China Chamber of Commerce specifically highlighted the imposition of a fine of USD180 million against a Chinese company accused of not having a licence to use forest areas.
Fifth, the halting of major projects. The authorities have forcibly intervened in company operations and accused projects implemented by companies of damaging forests and worsening flood disasters.
Sixth, tightening of work visa scrutiny. According to the China Chamber of Commerce, the granting of work visa approvals has become increasingly complex, with higher costs and increasingly unreasonable restrictions. This is hampering the work of technical and managerial personnel.
In addition to these six issues, the China Chamber of Commerce also expressed concern about plans to impose export duties on certain products, the removal of incentives for electric vehicles and the reduction of tax relief for special economic zones (SEZ).
In its letter, the China Chamber of Commerce expressed the view that Chinese businesses remain optimistic about the continuation of trade and economic cooperation between Indonesia and China.
However, Chinese companies face a wide range of issues arising from non-transparent tax, environmental and forestry law enforcement standards that grant excessive discretionary authority. See For Legal Certainty, Tax Should Be Imposed Without Discretion
"This not only increases operational risks for companies, but also severely damages Indonesia's business environment," wrote the China Chamber of Commerce.
Going forward, the China Chamber of Commerce hopes the Indonesian government will continue to prioritise a stable and predictable business climate for businesses by standardising law enforcement and providing protection for the rights of foreign investors.
For information, concerns regarding business certainty in Indonesia were also raised previously by South Korea. The South Korean tax authority, the National Tax Service (NTS), specifically conveyed the difficulties faced by South Korean companies in Indonesia in claiming VAT refunds.
"[NTS Commissioner] Lim Kwanghyun listened to the tax-related issues faced by South Korean businesses, including delays in VAT refunds and discussed practical steps to support their operations," the NTS wrote last December.
The difficulties faced by the South Korean companies in question were conveyed directly by Lim to the Director General of Taxes, Bimo Wijayanto, at the 12th Korea-Indonesia Commissioners’ Meeting.
In addition to this topic, there is also a review of the DGT's authority to supervise and audit GloBE taxpayers as well as a discussion of the overhaul of the regulations on cigarette tax.
Below is the full review of tax articles.
DGT Authorised to Supervise and Audit GloBE Taxpayers
Director General of Taxes Regulation No. PER-6/PJ/2026 also sets out in detail the DGT's authority to supervise and audit GloBE taxpayers.
Referring to Article 23 paragraph (1) of PER-6/PJ/2026, the DGT is authorised to supervise the fulfilment of GloBE taxpayers' tax obligations. A GloBE taxpayer is defined as a constituent entity or member of a joint venture group established or domiciled in Indonesia that is a member of a GloBE-covered multinational enterprise group.
"Supervision referred to in paragraph (1) shall be conducted based on the results of the examination of data and/or information held by the DGT," reads Article 23 paragraph (3) of PER-6/PJ/2026. (DDTCNews)
Electric Vehicle Incentives to Be Announced in Early June
The government will announce fiscal incentives for electric vehicles in early June 2026.
The incentives take the form of government-borne (ditanggung pemerintah/DTP in Indonesian) VAT for electric cars, the amount of which depends on the type of battery used. Government-borne VAT of 100% will be provided for electric cars using nickel-based batteries (nickel manganese cobalt/NMC), while electric cars using batteries other than nickel, such as lithium iron phosphate (LFP), will receive government-borne VAT of 40%.
"To ensure our nickel remains competitive and the battery electric vehicle downstream project continues, early next month I will announce incentives for the automotive industry, particularly electric cars using nickel-based batteries," said Minister of Finance, Purbaya Yudhi Sadewa. (DDTCNews)
Cigarette Tax Collection and Remittance Rules Overhauled
Purbaya has issued MoF Reg. 26/2026, which revises the procedures for the collection, withholding and remittance of cigarette tax.
This regulation, which has been in effect since 12 May 2026, repeals and replaces the previous regulation, namely MoF Reg. 143/2023. The replacement of the regulation was conducted to align with developments in cigarette tax administration.
“To provide guidelines for the government and local governments in the collection, withholding and remittance of cigarette taxes, it is necessary to re-stipulate the provisions on procedures for the collection, withholding and remittance of cigarette tax,” reads the considering section of MoF Reg. 26/2026. (DDTCNews)
Steel Sector Taxpayers Audited by Purbaya Now Named Suspects
The Banten DGT Regional Office has designated RS, CX, GM, HQ and LCH as tax crime suspects. The five suspects are management members, shareholders and controllers of 3 corporate taxpayers in the steel industry sector that were personally visited by Purbaya, namely PT PSI, PT PSM and PT VPM.
"This is also part of the follow-up to supervisory activities we previously conducted together with the Ministry of Finance," said Head of the Banten DGT Regional Office, Aim Nursalim Saleh.
Based on the audit findings, the five suspects are alleged to have deliberately filed periodic VAT returns whose contents were incorrect or incomplete and to have sold taxable goods (BKP) without collecting VAT. Moreover, the five suspects also used third-party accounts to receive sales proceeds and to conceal the actual turnover figures. (DDTCNews, Antara, CNBC Indonesia)
Purbaya: Budget Cuts for Regions & Ministries Hindering Investment
Purbaya will cut transfers to regions (transfer ke daerah/TKD) for local governments considered to be obstructing the inflow of investment into Indonesia.
Purbaya said every local government must formulate and ensure that its policies also support investment and economic growth in its territory. This aims to enable businesses to grow and the regional economy to advance.
"If not, we will give a warning. This can be through the state secretariat minister, the minister of home affairs and others. If they persist, we can cut their TKD," he said at the International Seminar on Debottlenecking Channel. (DDTCNews) (dik)