BPK Uncovers Critical Weaknesses in Tax Information System

Significant Revenue Impact Identified

The Indonesian Audit Board (BPK) has revealed substantial weaknesses in the Tax Directorate General's information system, potentially resulting in Rp6.21 trillion in unrealized tax revenue. The audit findings, detailed in the Summary of Audit Results (IHPS) for the first half of 2025, indicate that the current system lacks the capability to detect discrepancies between tax payments and reported data from both taxpayers and withholding agents.

Breakdown of Potential Revenue Loss

The audit identified that the unrealized revenue includes Rp6.12 trillion in Value Added Tax (VAT) and Rp85.13 billion in Income Tax. These figures represent significant potential revenue that could have been collected if the tax information system was functioning effectively. The inability to reconcile these discrepancies in a timely manner has directly impacted the government's revenue collection efforts.

Implications for Tax Administration

This finding brings to light critical vulnerabilities in Indonesia's tax administration infrastructure. The lack of an effective system to cross-verify tax payments and reporting data creates substantial risks to revenue collection. Addressing these weaknesses will be crucial for improving tax compliance and maximizing government revenue.

Path Forward

The BPK's findings underscore the urgent need for the Tax Directorate General to upgrade and enhance their information systems. Implementing robust data reconciliation mechanisms will be essential for preventing future revenue leakage and strengthening overall tax administration.