ASIATODAY.ID, JAKARTA – Cunning and deceptive practices by Chinese-owned steel manufacturers operating in Indonesia have been exposed after a surprise inspection by Finance Minister Purbaya Yudhi Sadewa, revealing systematic tax evasion that cost the state an estimated IDR 583.36 billion (around $34.7 million).
During an on-site inspection at a steel plant in Tangerang, Banten, on Thursday, February 5, 2026, authorities uncovered deliberate schemes to avoid tax obligations, particularly Value Added Tax (VAT).
The companies are accused of intentionally manipulating the tax system, including failing to collect VAT, filing false tax returns, and hiding revenue through cash-based transactions and “proxy” bank accounts registered under executives, shareholders, and even employees.
“This is not negligence. It is a repeated and systematic pattern,” Purbaya said.
Investigators from Indonesia’s Directorate General of Taxes identified three affiliated Chinese steel entities—PT PSI, PT PSM, and PT VPM—as central to the scheme. The alleged tax fraud occurred over a three-year period from 2016 to 2019.
Authorities also warned that the case may represent only a fraction of a much larger problem. Up to 40 affiliated steel companies are suspected of using similar deceptive practices.
If confirmed, the potential losses to the state could reach IDR 4 trillion per year, equivalent to approximately $238 million annually.
Purbaya stressed that the inspection was meant as a clear warning to all businesses operating in Indonesia.
“We are fixing this so these practices cannot continue. The market must be fair,” he said.
The investigation is ongoing, and officials caution that the estimated losses may increase as further evidence is collected.
The case underscores the government’s tougher stance against tax fraud, corporate deception, and unfair competition in Indonesia’s steel industry. (AT Network)
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