Jakarta. Finance Minister Purbaya Yudhi Sadewa on Thursday carried out a surprise inspection of two steel processing companies in Tangerang Regency, following allegations they had evaded value-added tax (VAT), potentially costing the state up to Rp 500 billion ($29.6 million).

The latest enforcement push is part of the government’s broader effort to tighten tax compliance and restore public confidence following a string of high-profile corruption cases involving revenue officials.

The inspection took place at the Millennium Industrial Estate, just west of Jakarta, after several tax officials were arrested by the Corruption Eradication Commission (KPK) in separate bribery cases involving corporations accused of paying kickbacks to reduce their tax liabilities.

“Based on the information we received, there is potential unpaid tax of up to Rp 500 billion from these two companies alone,” Purbaya said after the visit. “That is significant, especially considering there are dozens of other firms facing similar allegations.”

Purbaya said preliminary findings indicated the companies avoided paying VAT by selling products directly to clients in cash transactions. One of the inspected firms is foreign-owned and operates in partnership with local business interests, he added.

The two companies were identified only by their initials, PSM and PSI, and officials did not clarify whether they are affiliated.

Purbaya warned that the government would take a hard line against such practices.

“Do not do this again. We cannot be bribed. If anyone tries to play games, we will come down hard,” he said.

The Finance Ministry is currently investigating around 40 companies suspected of similar violations, with total potential losses to the state estimated at up to Rp 5 trillion ($296 million), according to Purbaya.

During the inspection, he also noted signs of manipulation in reported business scale. While the factories appeared poorly maintained, their actual production capacity was substantial.

“Their production value is quite large, but it is not matched by tax compliance,” Purbaya said, without providing further details.

He added that Indonesia’s improving economic growth must be accompanied by stronger fiscal discipline.

“As the economy accelerates, activity will increase again. But we expect taxes to be paid in accordance with regulations, without creating distortions in the market,” Purbaya said.

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