Ministry of Finance of the Republic of Indonesia
Directorate General of Taxes Directorate of Tax Regulations II
1
FRAUD AND DECEPTION IN
FINANCIAL REPORTING:
A PERSPECTIVE OF
Fraud and deception in financial
reporting is a worrisome
phenomenon, in particular, but not
only, in times of economic crises
Role of Tax Revenue in Government Budget
2010 2011 2012 2013 2014 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000
Tax Revenue Total Budget Revenue 2010 2011 2012 2013 2014
70.00 71.00 72.00 73.00 74.00 75.00 76.00 77.00 72.67 72.19 73.28 74.87 76.20
Tax Revenue and Total Budget Revenue (Billion Rupiah)
Ratio of Tax Revenue to Total Budget Revenue (Percent)
•
Tax authority uses financial information to
assess taxpayers’ adherence to tax laws
under the self assessment regime
•
One of the greatest risks to tax authority is
the risk that the financial information upon
which they rely is materially misstated,
either erroneously or intentionally
•
When such financial information is
misstated by any scheme, artifice, or device
with the intent to mislead tax authority,
then efforts to
redistribute income and
establish economic equity
will also be
Indonesia’s Gini Index
2010 2011 2012 2013 2014 0.37
0.37 0.38 0.38 0.39 0.39 0.4 0.4 0.41 0.41 0.42
0.38
0.41 0.41 0.41 0.41
Tax Ratio and Tax Buoyancy
Source: Badan Pusat Statistik
2010 2011 2012 2013 2014 9.50
10.00 10.50 11.00 11.50 12.00
0.00 0.50 1.00 1.50 2.00 2.50
Tax Ratio (%, kiri) Tax Buoyancy (kanan)
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Tax Ratio of Indonesia and Neighboring
Countries
2006 2007 2008 2009 2010 2011 2012 0
2 4 6 8 10 12 14 16 18 20
Malaysia Philippina Thailand Indonesia
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LAW NO. 6/1983
ON THE
GENERAL PROVISIONS AND PROCEDURES
OF TAXES
AS LASTLY AMENDED BY LAW NO. 28/2007
Article 38
Whomsoever, due to his negligence:
a. fails to file a Tax Return; or
b. files an incorrect or incomplete Tax Return, or
attaches incorrect information,
which may cause losses to the revenues of the
state, and this is conducted as a conduct after the
first one referred to in Article 13A, shall be fined by
at least 1 (one) time the amount of unpaid or
Article 39 Paragraph 1
Whomsoever deliberately :
a. fails to register for a Taxpayer Identification Number, or fails to register his business to be confirmed as a Taxable Person for Value Added Tax Purposes;
b. misuses or uses without authority, a Taxpayer
Identification Number or Confirmatian of Taxable Person for Value Added Tax Purposes Number;
c. fails to file a Tax Return;
d. files a false or incomplete Tax Return and or information; e. refuses to be audited as referred to in Article 29;
f. shows an account, record or other document that is false
or forged, or does not reflect the truth;
LAW NO. 6/1983
ON THE
GENERAL PROVISIONS AND PROCEDURES
OF TAXES
Article 39 Paragraph 1 (Cont.)
g. fails to maintain bookkeeping or records in lndonesia, or fails to show or make available accounts, records or other documents;
h. fails to keep books, records, or documents upon which the bookkeeping or recording is based and other documents including an output of data processing that is managed electronically or handled as on-line applications in
lndonesia as referred to in paragraph (11) of Article 28; or
i. fails to remit tax already withheld or collected;
Tax Compliance in Indonesia
Source: Directorate PKP DG Tax
Year 2012 2013 2014 2015
Registered Taxpayers 22,564,969 24,886,638 27,942570 30,456,809
Registered taxpayers are required to report SPT
17,659,278 17,731,736 18,357,833 18,159,840
compliance ratio target 62,50% 65,00% 70,00% 70,00%
the realization of annual income tax returns
9,237,947 9,964,862 10,848,429 10,508,959
Compliance ratio 52,31% 56,20% 50,09% 57,87%
the achievement of compliance ratio
83,70% 86,46% 84,42% 82,67%
The Number of Registered Taxpayer
The Number of Registered Taxpayer are required to report SPT
The Number of SPT
Tax Revenue Projections
2015-2019
(Trillion Rupiah)
2015 2016 2017 2018 2019 -
500.0 1,000.0 1,500.0 2,000.0 2,500.0
1,244.7 1,320.0
1,524.9
1,771.2
2,068.8
Tax Revenue Growth Projections
2016-2019
(percent per year)
2016 2017 2018 2019 -
2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
6.0
15.5 16.2
16.8
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1) Massive use of information
technology to monitor taxpayers
2) Expansion of witholding taxes
3) Improving access to third parties’
data
