Under-invoicing is the practice of listing an invoice value lower than the actual price for a good or service, with the aim of reducing tax payments by manipulating profit margins, essentially to gain the benefit of exemptions from import duties and Import Tax (PDRI). This practice is clearly illegal, and the government has regulated how to prevent under-invoicing in trade. The government, through the Ministry of Finance, issued Ministerial Regulation (PMK) Number 96 of 2023 concerning Provisions for Customs, Excise, and Taxes on the Import and Export of Consigned Goods (“PMK 96/2023”) to regulate the import business process of consigned goods, including following up on indications of under-invoicing. The practice of under-invoicing clearly has a significant detrimental impact on the government. The government has implemented preventative measures, but this also depends on business actors who comply with regulations and do not engage in illegal acts merely for short-term profit, which have a significant impact on the sustainability of the national economy. The mitigation strategy implemented is to add a self-assessment scheme for trade shipments, which carries fines for undervalued goods. Meanwhile, non-trade shipments continue to use official assessments without any fines. 1. Legal Implications of Under-Invoicing on State Revenue The practice of under-invoicing significantly impacts state revenues from various perspectives, as follows: By reducing import duties and taxes by under-reporting the value of goods, importers pay less than they should, directly reducing state revenues. In extreme cases, under-invoicing can trigger smuggling, where illegal or prohibited goods are imported into the country by disguising their value or type. This leads to distortion of economic data related to export and import values, which can hinder accurate economic analysis and policy formulation by the government. The financial woes caused by under-invoicing are exacerbated by this practice, which constitutes a form of illicit financial flow that harms the state. These losses are not limited to import duties but also include other taxes due to the lower value of goods recorded. 2. Strategies to Prevent Under-invoicing To prevent or eliminate the under-invoicing practices described above, several strategies can be implemented. One example is requiring Electronic Trading Providers (PPMSE) or e-commerce companies to partner with the Directorate General of Customs and Excise (DJBC). While previously, partnerships between PPMSE and DJBC were optional, PMK 96/2023 makes this partnership mandatory. This is implemented on the condition that import transactions exceed 1,000 shipments in a calendar year. Through this partnership, PPMSE operators must exchange data, including electronic catalogs (e-catalogs) and electronic invoices (e-invoices). Once an electronic catalog and an electronic invoice are available, the Directorate General of Customs and Excise (DJBC) will reconcile the e-invoice from the e-commerce company with the Consignment Note (CN) sent by the Freight Forwarding Company (PJT). When discussing unlawful acts, sanctions or criminal penalties are usually imposed as a deterrent. These include: The Directorate General of Customs and Excise (DJBC) can impose administrative fines for misreporting customs values. The amount of these fines is regulated by law and can range from hundreds to thousands of percent of the import duty actually paid. In addition to administrative sanctions, this practice can also be categorized as customs fraud, which is punishable by criminal penalties stipulated in Article 103 and/or Article 104 of Law Number 17 of 2006 concerning Amendments to Law Number 10 of 1995 concerning Customs. The practice of under-invoicing, which clearly has a significant detrimental impact on the government, has been implemented through preventative measures, such as the issuance of a new regulation, PMK 96/2023, collaboration between the Directorate General of Customs and Excise (DJBC) and business actors through the PPMSE (Indonesian Financial Services Authority), and the commitment of the President and Minister of Finance to eliminate under-invoicing. However, this is also due to business actors who have complied with and adhered to regulations and have not engaged in illegal acts merely for short-term profit, which have a significant impact on the economy.
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