Understanding Tax Crime Investigations

In its 2023 Annual Report, the Directorate General of Taxes (DGT) revealed that it had completed 89 investigation files, which were officially declared complete (P-21) by the public prosecutor. Additionally, the report noted that 308 case files had been submitted to the public prosecutor for further processing. A closer look at the DGT’s investigative performance in 2023 reveals the following activities:

Source: DGT (2024)

Compared to the previous year, the number of investigation files deemed complete by the public prosecutor has decreased. In 2022, 114 files reached the P-21 stage. So, what exactly does a tax investigation entail? Let’s take a closer look at how tax crime investigations are conducted.
In general, tax crime investigations are regulated under the UU KUP, with additional provisions outlined in Minister of Finance Regulation (Peraturan Menteri Keuangan/PMK) Number 17 of 2025 regarding the Investigation of Tax Crimes, issued in February 2025.

According to Article 1, Number 31 of the regulation, a tax crime investigation is a series of actions undertaken by investigators to gather evidence and clarify whether a tax-related criminal offense has occurred, ultimately identifying the suspect.

Before launching a full investigation, DGT investigators typically conduct a preliminary examination based on information, data, reports, and complaints. If this examination uncovers indications of a tax crime, an official investigation follows.

Tax Crimes

As noted earlier, tax investigations aim to uncover tax-related criminal activities. While the UU KUP does not explicitly define tax crimes, Articles 39 and 39A outline specific offenses, including:

1. Failing to register for a taxpayer identification number (Nomor Pokok Wajib Pajak/NPWP) or report business activities for taxable entrepreneur (Pengusaha Kena Pajak/PKP) status.
2. Misusing or improperly using an NPWP or PKP confirmation.
3. Failing to submit tax returns.
4. Submitting tax returns with incorrect or incomplete information.
5. Refusing to undergo an audit.
6. Presenting false or fabricated records, books, or documents as legitimate.
7. Keeping business records outside Indonesia, failing to provide records upon request, or failing to maintain required documentation.
8. Not keeping books, records, or documents that support financial reporting.
9. Failing to remit taxes that were withheld or collected.
10. Issuing and/or using tax invoices, tax collection slips, withholding tax slips, and/or tax payment slips not based on actual transactions.
11. Issuing tax invoices without proper PKP confirmation.

Violations that result in financial losses to the state can lead to criminal penalties.

Furthermore, Articles 41 and 41A outline punishments for officials who fail to uphold confidentiality laws and individuals who deliberately provide false information or obstruct an investigation.

Tax Crime Investigators

Only designated DGT officials with special investigative authority can conduct tax crime investigations. These investigators have broad authorities, including:

1. Gathering and verifying reports of suspected tax crimes.
2. Gathering and verifying information regarding individuals or entities involved in suspected tax offenses.
3. Collecting and reviewing relevant evidence from individuals or entities involved in suspected tax offenses.
4. Inspecting financial records, bookkeeping, and related documents.
5. Conducting searches and seizing evidence.
6. Seeking expert assistance during investigations.
7. Ordering individuals to remain at a location while an investigation is underway.
8. Photographing individuals related to tax crimes.
9. Summoning witnesses and suspects for questioning.
10. Halting investigations when necessary.
11. Taking any other legally sanctioned actions necessary to effectively carry out investigations.
     

Given the broad authority of tax crime investigators, they are required to carry an official investigation order, which includes the following details:

1. basis for the investigation;
2. identity of the reported party or suspect;
3. identity of the investigation team;
4. specific cases being investigated;
5. the time when the crime occurred (tempus delicti);
6. the location where the crime took place (locus delicti); and
7. identity of the investigator issuing the order.

Investigation Process

Tax crime investigations are often lengthy and complex. The goal is to obtain concrete evidence and establish the facts of the case. According to PMK 17 of 2025, tax crime investigations involve 13 key activities:

1. Summoning Witnesses and Suspects: A formal summons is issued to require the presence of witnesses, experts, or suspects to provide testimony regarding the alleged crime.
2. Examination: Investigators conduct examinations to gather and clarify information from witnesses, experts, and suspects. The findings are documented in an official report.
3. Arrest: Investigators can temporarily detain a suspect for questioning following the Criminal Procedure Code if there is sufficient evidence.
4. Detention: Suspects can be held in a designated facility by order of an investigator, prosecutor, or judge as outlined in the Criminal Procedure Code.
5. Search: Investigators may conduct house searches, enter a residence or other private location to inspect for evidence, seize relevant items, or make an arrest. This action is carried out under the Criminal Procedure Code.
   Body searches allow investigators to physically search a suspect. This search can include inspecting the suspect's body or clothing to identify and confiscate any potentially relevant suspicious items to the investigation as regulated in the Criminal Procedure Code.
6. Asset Freezing and Seizure: Asset freezing is conducted to secure goods by financial institutions and other entities, such as bank accounts, securities sub-accounts, insurance policies, and other financial assets. The goal is to prevent any changes to these assets, except for an increase in quantity or value. Seizure, on the other hand, involves a series of actions by investigators to take control of movable or immovable, tangible or intangible assets. These assets are seized to serve as evidence and/or to help recover losses to state revenue during investigations, prosecutions, and trials.
7. Electronic Data Handling.
8. Travel Ban: Investigators can temporarily ban individuals from leaving Indonesia during an ongoing investigation.
9. Suspect Identification: A suspect is formally designated based on at least two pieces of valid evidence and an examination while the individual is still considered a witness.
10. Case File Compilation: This process involves assembling case documents under legal requirements, ensuring proper organization, binding, sealing, and numbering of files.
11. Submission of Case Filesa: Completed case files are handed over to public prosecutors once investigations are finalized.
12. Handover of Suspect and Evidence
13. Case Dismissal

Provision

• Law of the Republic of Indonesia Number 6 of 1983 regarding General Provisions and Procedures of Taxation, as amended by Law of the Republic of Indonesia Number 7 of 2021 regarding Harmonization of Tax Regulations.
• PMK Number 17 of 2025 regarding Investigation of Tax Crimes.

References

• DJP2023Laporan Keuangan 2022 DJP: Bersama dalam Semangat ReformasiJakartaDJP
• DJP2024Laporan Tahunan DJP 2023: Strengthening Strategy, Bosting PerformanceJakartaDJP