When Taxes Become Negotiable, Trust Is What’s at Stake

By Kusnandar & Co., Attorneys At Law – Jakarta, Indonesia

The Corruption Eradication Commission’s (KPK) search of the Directorate General of Taxes’ headquarters is far from a routine law enforcement move. This is not just about uncovering one corruption case; it strikes at the very heart of Indonesia’s state revenue system. Taxes, long promoted as the backbone of national development, are once again under scrutiny because of the actions of a handful of officials who chose personal gain over public trust.

The alleged bribery case involving tax reduction at the North Jakarta Medium Tax Office paints a troubling picture of how authority can turn into a bargaining chip. What began as a potential underpayment of roughly Rp75 billion in land and building tax ended with an official tax bill of only Rp15.7 billion. The gap is staggering. It represents not just lost state revenue, but also a serious blow to the credibility of the tax administration system.

The term “all in,” which surfaced during the investigation, sounds disturbingly casual for a process that should be governed strictly by law. Taxes are meant to be calculated based on clear regulations, not negotiated like a business deal. Yet this case reveals alleged fee arrangements, backroom agreements, and money distribution among insiders. The use of fictitious consulting contracts to channel bribe payments further suggests that this was not an impulsive act, but a well-planned scheme.

What makes this situation even more concerning is the broader impact on public trust. Law-abiding taxpayers—individuals and businesses alike—have every reason to feel frustrated. They pay their dues in full, on time, and without shortcuts. Meanwhile, cases like this create the perception that those with the right connections can simply “adjust” their tax obligations. When fairness is questioned, voluntary compliance—the very foundation of a healthy tax system—begins to erode.

KPK’s swift actions, from searches and evidence seizures to arrests, deserve recognition. They send a strong message that no institution is above the law. However, enforcement alone is not enough. This case should serve as a loud wake-up call for the Directorate General of Taxes to pursue genuine and comprehensive internal reform, not merely reactive measures once a scandal becomes public.

Tax reform cannot stop at slogans and digital banners. Internal oversight mechanisms must be strengthened, job rotations should be conducted transparently, and digital systems should be optimized to minimize direct, unmonitored interactions between tax officers and taxpayers. The fewer opportunities for “under-the-table” dealings, the better. Equally important are firm and consistent sanctions. Without real consequences, corruption risks becoming a recurring cycle rather than a preventable exception.

At its core, taxation is a form of collective responsibility. Citizens are asked to contribute to national development, and in return, the state is expected to manage those contributions with integrity and accountability. When taxes are illegally negotiated, what’s lost is not only money, but also confidence in the government’s ability to uphold justice.

This case should be a moment of collective reflection. Integrity within the tax authority is not optional—it is essential. Without it, no matter how sophisticated the regulations or systems may be, loopholes will always exist. And as long as those loopholes remain, public trust will continue to be the ultimate casualty.

K&Co - January 13, 2026