T

he tax office unveiled on Friday a tax fraud case involving a trading company that might have inflicted a financial loss of about Rp 29 billion (about US$3.4 million) on state finances.

Edward Sianipar, the head of tax investigation and collection at the Directorate General of Taxation, said that the company, known by its initials PT LBC, had allegedly used falsified tax invoices in its crime.

“The firm booked hundreds of billions of rupiah in revenues, but only paid Rp 300,000 to Rp 500,000 in taxes per month. This is how the suspicion began,” he told a news conference at the tax office in Jakarta.

The method involved the issuance of tax invoices based on fictitious business transactions so that the company was able to manipulate its value added tax payments, Agung Wuryantoro, head of the North Jakarta tax office, said, adding that the tax office was also investigating eight other companies suspected of involvement in the crime.

Two suspects in the case, respectively a shareholder and an employee of PT LBC, were detained by the Jakarta Police on Thursday, the tax officials said.

According to Agung, it is unlikely that the internal tax officer was involved in the scheme, because, unlike common modus operandi of previous years, this case did not involve bogus tax refunds.

“The modus operandi is very different now, compared to, say, five years ago. Previous tax fraud would include restitutions or refunds so there was internal involvement,” Agus said, adding that the tax officers had uncovered the case after two months of investigative work.

The case comes amid a massive reform movement within the notoriously corrupt tax office, which is responsible for hundreds of trillions of rupiah of state income, but known as one of the most corrupt government institutions, a status cemented last year by the high-profile case of graft convict Gayus H. Tambunan, which dominated news headlines for months.

The former junior tax official took bribes from large corporations to help them reduce their taxes in a case that has implicated other officials at the tax office who enjoyed the money collected by Gayus.

Edward said he expected the case to shed light on many more tax fraud cases that might have cost the country a considerable portion of its main source of income — tax. “This is one of our efforts in uncovering tax crimes. I hope it can be of help and set an example [to inspire] other officials.”

The suspects are suspected of having violated General Provisions and Taxation Procedures Law Article 39a on issuance of a false tax invoice, which carries a punishment of up to six years jail and penalties of up to six times the value of the fraud.

Jakarta Police spokesman Sr. Comr. Baharudin Jafar said the police’s role in the case was only to capture the suspects.