What happened
The Bali regional office of Indonesia's Directorate General of Taxes (DJP) has completed a criminal investigation into the underpayment of value added tax, known in Indonesia as PPN. On Wednesday, 7 October 2026, the case was transferred to the Denpasar district prosecutor's office.
Investigators say the scheme was run by the director of a private company, PT CPJB. His full name has not been released, only the initials NS. The tax office estimates the loss to state revenue at a minimum of Rp3.5 billion.
The allegations
There are two strands to the case. The first involves tax invoices, called faktur pajak, that were not backed by genuine transactions. Investigators allege NS knowingly claimed these invoices as input credits in the company's monthly VAT returns, lowering the tax it owed.
The credit mechanism is simple. A company registered for VAT charges tax on its sales and deducts the input tax shown on its suppliers' invoices. More input invoices mean a smaller payment to the treasury, so an invoice with no real deal behind it directly cuts the tax the state should receive.
The second concerns the returns themselves. According to DJP, they contained false information because the company left out part of its sales and deliveries. The alleged offences cover tax periods from January 2021 through December 2023.
NS is suspected of breaching Article 39A letter a and Article 39 paragraph 1 letter d of Indonesia's law on general tax provisions and procedures (UU KUP), as amended. That law sets the core rules on filing and the penalties for violations.
Where the case stands
The investigation was carried out by the tax office's civil servant investigators, known as PPNS. These are officials with powers to conduct criminal investigations within their own field. The public prosecutor has declared the case file complete.
The suspect and the evidence have now been handed over to prosecutors in Denpasar, and the matter will go before a court. No hearing date was given.
What the tax office said
DJP Bali head Darmawan was direct about the damage. “We estimate the suspect's actions caused a loss to state revenue of at least Rp3.5 billion,” he said.
He also urged taxpayers to learn from the case. Rights and obligations should be met correctly and in line with the rules, he said, describing compliance as a matter of fairness toward those who pay in full.
Filing discipline is improving
Alongside the case, DJP Bali released figures on annual returns. By August 2026, taxpayers in Bali had filed 379,859 annual income tax (PPh) returns, up from 375,593 in the same period of 2025. That is growth of 1.14%.
Companies filed 44,254 of this year's returns and individuals filed 335,605. The numbers point to a large and slowly growing taxpayer base on the island. At the same time, the tax office is taking VAT schemes all the way to court.
What it means for businesses on the island
Many Bali companies operate in tourism, rentals and construction, with large sums flowing through long chains of contractors. Any invoice in such a chain can draw scrutiny if no payment and no completed work stand behind it.
The PT CPJB case also shows that the tax office looks back several years. Alleged violations from 2021 reached prosecutors only in 2026, so errors in old returns remain a risk even after an accountant or director changes.
Liability here falls on an individual. The suspect is the director who signed the company's returns. Foreigners who sit on the boards of Indonesian companies should note that signing a return carries personal responsibility.