On September 8, 2026, Minister of Finance Purbaya Yudhi Sadewa commented on the proposal by the House of Representatives to include tax crimes as predicate offenses under the Asset Forfeiture Bill.
Purbaya stated that asset forfeiture should not necessarily apply to a taxpayer who commits a violation once. According to him, fairness considerations should be taken into account, with asset forfeiture more appropriate for repeated violations or cases involving an intent to mislead the tax authority.
Tax crimes are among the 13 proposed predicate offenses under the bill. Other proposed predicate offenses include corruption, narcotics offenses, terrorism, and environmental crimes. Commission III of the House of Representatives deliberated this proposal with legal experts after a comparative study across countries.
Purbaya also pointed out the need to distinguish intentional violations from those resulting from negligence. The distinction is essential to prevent asset forfeiture procedures from being applied to administrative errors supposedly resolved through administrative penalties.
He also explained that Indonesian tax law is familiar with the intentional element and repeated offense concept. General Provisions and Procedures of Taxation (KUP) Law already distinguishes between tax violations committed through negligence and those committed intentionally.
Negligent violations are subject to administrative sanctions in the form of interest or fines, while Article 39 of the KUP Law requires an element of intent to constitute a criminal offense. The penalties may also be doubled if the offense is repeated within one year after the taxpayer has completed a previous sentence.
Therefore, Purbaya’s statement is consistent with principles adopted under the KUP Law. The difference lies in intent and repetition serving as additional grounds for asset forfeiture, rather than merely determining criminal liability or aggravating an existing criminal penalty.
Ultimum Remedium
Indonesian tax law already recognizes the principle of ultimum remedium, under which criminal enforcement serves as a last resort. Article 44B of the KUP Law allows a tax crime investigation to be terminated upon the request of the Minister of Finance to the Attorney General if the taxpayer or suspect pays the state revenue loss together with the applicable administrative sanction, provided the termination takes place before the case is submitted to the court. The rule demonstrates tax law enforcement beyond punishments. It focuses on state revenue recovery.
Nevertheless, classifying tax crimes as predicate offenses under the asset forfeiture regime introduces legal friction. Lawmakers must clarify whether terminating an investigation under Article 44B of the UU KUP automatically halts asset forfeiture proceedings initiated against the same assets, or whether both actions proceed independently.
Overlapping Authorities
Beyond the Asset Forfeiture Bill, Indonesia’s tax system already features a statutory procedure to seize assets belonging to defaulting tax debtors. The procedure is governed by Law of the Republic of Indonesia Number 19 of 1997 concerning Tax Collection by Distress Warrant, as amended by Law of the Republic of Indonesia Number 19 of 2000 (PPSP Law).
The procedure is an administrative enforcement executed directly by tax bailiffs in structured stages. It begins when outstanding tax liabilities established under tax assessment letters or tax collection letters remain unpaid past their due dates.
If the debt remains unpaid seven days after the due date, tax authorities issue a warning letter under Government Regulation Number 74 of 2011. If unresolved within the next 21 days, a distress warrant is issued ordering immediate settlement under Ministry of Finance Regulation Number 24/PMK.03/2008.
If payment is not settled within 2x24 hours of serving the distress warrant, the tax bailiff executes a seizure order. If the debt remains outstanding 14 days after seizure, tax authorities announce a public auction, which takes place at least 14 days after the announcement.
Under specific circumstances, the PPSP Law permits immediate and accelerated tax collection without waiting for due dates, such as when a debtor is suspected of fleeing Indonesia, liquidating assets, or demonstrating bad faith. The ultimate purpose of this procedure is administrative debt recovery, not criminal punishment.
Integrating tax crimes into the Asset Forfeiture Bill could create operational overlaps with the PPSP Law collection procedures. At least five issues demand explicit regulatory resolution.
First, limits on tax obligations for third parties granted temporary use of assets prior to final court judgments. Second, priority claims between a DGT asset seizure under the PPSP Law and a law enforcement asset forfeiture application targeting the same asset.
Third, the legal status of asset forfeiture auction proceeds remitted as non-tax state revenue when the offender still has tax debts. Fourth, tax treatment for appreciated asset values returned to innocent third parties.
Finally, jurisdictional rules governing the authority allocation and coordination among the Attorney General’s Office, the DGT, and the Directorate General of State Assets. Including tax crimes as predicate offenses makes such issues noteworthy.
The DGT will inevitably clash with law enforcement agencies over the same taxpayer’s assets. Thus, clear priority guidelines are necessary for cases where seizures under PPSP Law and criminal asset forfeiture filings occur simultaneously.
International Practices
The explanation leads to the next question. Is it standard practice internationally to include tax crimes as predicate offenses in asset forfeiture statutes?
In its revised 2012 recommendations, the Financial Action Task Force classified tax crimes as predicate offenses for money laundering. The European Union adopted this approach through the Fourth Anti-Money Laundering Directive in 2015.
Singapore has enacted a similar approach since 2012, while Hong Kong treats tax evasion as a money laundering predicate offense in indictable cases.
Consequently, several jurisdictions treat tax crimes as predicate offenses for money laundering, rather than as standalone predicate offenses within an independent asset forfeiture regime.
Australia takes a broader approach under its Proceeds of Crime Act 2002. The Australian Taxation Office collaborates with the Federal Police and prosecutors to restrain and forfeit assets derived from tax crimes without requiring a prior money laundering conviction (Turnbull Hill Lawyers, t.t.).
Regardless, they maintain strict procedural safeguards, distinguishing between conviction-based and non-conviction-based forfeitures. The latter requires specific restraint periods and proof under the balance of probabilities standard.
In its report Fighting Tax Crime – The Ten Global Principles, Second Edition (2021), the Organisation for Economic Co-operation and Development notes that Japan does not permit asset seizure based solely on tax crime convictions, unless the assets are proven to be proceeds of money laundering linked to a tax predicate offense. Meanwhile, Costa Rica restricts non-conviction-based forfeiture to organized crime cases.
These international models demonstrate that cross-border treatments of tax crimes and asset forfeitures vary. Therefore, precise boundaries and procedures are necessary.
Harmonizing Tax Regulations
Purbaya’s proposal on limiting asset forfeiture related to tax crimes to repeated and intentional violations aligns with principles in the KUP Law. This consistency is essential to separate tax crimes from administrative errors.
However, defining intentionality and repetition concepts alone is insufficient. Lawmakers must formally reconcile the asset forfeiture procedures with tax collection procedures under the PPSP Law.
Without clear statutory boundaries, a single asset could face conflicting seizures under two separate legal regimes. Furthermore, authority relation rules must be established regarding enforcement among the DGT, the Attorney General’s Office, and the Directorate General of State Assets, particularly regarding priority of seizure and use of assets auctioned.
Global precedent demonstrates that tax crimes are rarely deployed as standalone predicate offenses under the asset forfeiture regime. Some countries link such crimes with money laundering crimes, whilst others apply direct forfeiture with specific procedural limitations.
Asset Forfeiture Bill deliberation must set precise boundaries and procedures for tax crimes, while ensuring harmony with regulated procedures under the KUP Law and PPSP Law.
Legal References
- Minister of Finance Regulation Number 24/PMK.03/2008 concerning Procedures for Tax Collection by Distress Warrant and Immediate and Accelerated Tax Collection.
- Government Regulation Number 74 of 2011 concerning Procedures for Exercising Tax Rights and Fulfilling Tax Obligations.
- Draft Bill concerning Asset Forfeiture Related to Criminal Offenses (Commission III of the House of Representatives Deliberation Text, 2026).
- Law of the Republic of Indonesia Number 6 of 1983 concerning General Provisions and Procedures of Taxation, as amended by Law of the Republic of Indonesia Number 7 of 2021 concerning Harmonization of Tax Regulations.
- Law of the Republic of Indonesia Number 19 of 1997 concerning Tax Collection by Distress Warrant, as amended by Law of the Republic of Indonesia Number 19 of 2000.
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