The Directorate General of Taxes (DGT) has once again come under public scrutiny following reports that it plans to intensify audits of taxpayers participating in the Voluntary Disclosure Program (Program Pengungkapan Sukarela/PPS), widely known as Indonesia’s second tax amnesty program. According to several national media reports, the DGT is preparing to impose stricter oversight on PPS participants suspected of failing to disclose their assets fully. The government has also emphasized that repatriation and investment commitments made under the program must be properly fulfilled.
Legally, the government’s position is well grounded. Article 11 of Law of the Republic of Indonesia Number 7 of 2021 concerning the Harmonization of Tax Regulations grants taxpayers the opportunity to disclose previously undeclared assets through the PPS, with the technical framework further regulated under Minister of Finance Regulation Number 196/PMK.03/2021.
Under these rules, any assets later discovered by the DGT that were omitted or underreported in the PPS may be treated as additional taxable income and subject to tax, as well as to administrative sanctions under prevailing tax regulations. From a legal standpoint, post-tax amnesty audits are therefore a natural extension of the tax enforcement system.
Tax Amnesty Audits and Public Trust
Even so, the issue goes beyond legal formalities. The policy also touches on taxpayer trust as a more fundamental pillar of modern taxation.
Indonesia adopts a self-assessment system, meaning tax compliance relies not only on penalties and audits, but also on public confidence in the consistency of government policy. In this context, audits of PPS participants could become an important test of the government’s ability to balance supervision with legal certainty.
Indonesia previously implemented its first tax amnesty program under Law of the Republic of Indonesia Number 11 of 2016 concerning Tax Amnesty. The program became one of the largest tax amnesty initiatives globally. According to Ministry of Finance data, it generated approximately IDR 130 trillion in redemption payments, more than IDR 4,813 trillion in declared assets, and around IDR 146 trillion in repatriated funds. More than 974,000 asset declaration letters were submitted, involving roughly 972,000 taxpayers.
The government later introduced the PPS in 2022. Official figures show the program generated around IDR 61 trillion in final income tax revenue, with disclosed net assets totaling approximately IDR 594 trillion, comprising domestic assets, offshore assets, and domestic investment commitments.
From a short-term fiscal perspective, both programs delivered substantial state revenue. However, they also raise a broader question about long-term tax compliance when tax amnesties become recurring policy instruments.
The Moral Hazard Risk Behind Tax Amnesties
In international tax literature, tax amnesty programs are generally viewed as extraordinary and temporary measures. James Alm and Betty Jackson, in their research on tax compliance, argue that compliance is shaped not only by audit risks and sanctions but also by perceptions of fairness and government credibility.
When tax amnesties are offered too frequently, taxpayers may come to assume that future amnesties will be available again. This can encourage some individuals or businesses to postpone compliance in anticipation of a later opportunity to regularize their obligations. In behavioral economics, this phenomenon is known as moral hazard.
The OECD expressed similar concerns in its 2015 report entitled Update on Voluntary Disclosure Programmes. The report notes that repeated tax amnesty programs risk weakening the credibility of tax authorities and undermining voluntary compliance. According to the OECD, amnesties are most effective when accompanied by consistent enforcement and meaningful structural reform, rather than being repeatedly introduced as standalone measures.
At the same time, compliant taxpayers may perceive repeated amnesties as unfair. Businesses and individuals that have consistently fulfilled their obligations could feel disadvantaged when taxpayers who previously concealed assets are repeatedly granted relief or reduced sanctions. Over time, this perception of inequity may erode voluntary compliance across the wider tax system.
Why Legal Certainty Matters in PPS Audits
Against this backdrop, the government’s plan to audit PPS participants is both understandable and highly sensitive. The state undoubtedly has the authority to verify whether taxpayers disclosed their assets accurately under the program. However, an overly aggressive supervisory approach could create the perception that tax amnesty programs serve only to gather taxpayer data before launching large-scale audits.
This concern should not be underestimated. One of the primary purposes of a tax amnesty is to encourage taxpayers to re-enter the formal tax system by providing a sense of certainty and security. If participation in the program later creates anxiety over unpredictable audits, public trust in the tax authority may gradually deteriorate.
For this reason, the government needs to carefully balance tax administration measures with the protection of the taxpayer's legal certainty. Audits should certainly be carried out against parties genuinely suspected of concealing assets or failing to honor repatriation commitments. However, they should remain selective and risk-based, rather than creating the impression that all PPS participants are potential offenders.
Equally important is the government’s public communication strategy. Tax authorities need to clearly emphasize that audits are intended for taxpayers who show indications of material non-compliance, not for those who participated in good faith and fulfilled their obligations properly.
Ultimately, sustainable tax reform cannot depend solely on repeated tax amnesty programs. Long-term success will depend far more on building a tax system that is fair, transparent, predictable, and administratively efficient. Integrating data systems, optimizing taxpayer services, and unifying regulatory oversight are likely to play a far greater role in securing durable state revenue growth than temporary amnesty measures alone.
In the end, legal certainty remains one of the most important foundations of a modern tax system. Taxpayers need confidence that government policies will be applied consistently and will not create uncertainty after they participate in official programs. More than another tax amnesty, what taxpayers ultimately need is a tax system capable of fostering long-term trust.
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