Jakarta. The Finance Ministry is investigating a Chinese-owned steel manufacturer in East Jakarta after preliminary findings indicated the company generated nearly Rp 10 trillion ($557 million) in sales while paying less than Rp 20 billion ($1.1 million) in taxes.

Finance Minister Purbaya Yudhi Sadewa disclosed the findings after conducting an unannounced inspection at the company's facility in the Pulogadung industrial estate, one of Jakarta’s largest manufacturing hubs, on Thursday.

He said the visit followed initial indications of business practices that may have allowed the company to significantly reduce its tax obligations relative to the scale of its operations.

“There are early indications that the company engaged in business practices that were not fair, resulting in lower tax payments, including value-added tax and corporate income tax,” Purbaya said.

“We requested clarification from the company and asked it to provide relevant documents so we can objectively assess its business activities.”

According to Purbaya, authorities have requested a broad range of records, including import documents, weighing and receiving records, supplier data, proof of payments, corporate bank accounts, sales and purchasing ledgers, inventory records, and employment data, including information on foreign workers.

The finance minister said the government is examining whether certain transaction structures or reporting practices may have affected the company’s tax liabilities.

“Based on the preliminary data, it is clear that tax payments appear disproportionately low compared with sales approaching Rp 10 trillion,” he said.

“The taxes paid may have been less than Rp 20 billion. That is extremely small for a business of this size. We suspect there may be loopholes that were used to reduce tax payments to the state.”

Purbaya emphasized that the investigation is not intended to discourage foreign investment or target Chinese businesses operating in Indonesia.

Instead, he said, the government’s objective is to ensure that all companies compete on equal terms and comply with Indonesian tax and trade regulations.

“I stressed to the company that my visit was not intended to shut down its business,” Purbaya said. “Our goal is to ensure that business is conducted fairly so that competition within Indonesia’s steel industry remains fair.”

The minister reiterated that Indonesia remains open to foreign investment, including investment from China, provided companies comply with applicable laws and regulations.

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