The Indonesian Attorney General’s Office has uncovered a multi-year tax transfer pricing case involving PT Toba Pulp Lestari Tbk, estimating a preliminary state financial loss of Rp2 trillion. Investigators have detained two Directorate General of Taxation officials and examined 111 witnesses in an investigation spanning 2008 to 2025.
A corporate tax and export manipulation investigation centered on pulp and forestry enterprise PT Toba Pulp Lestari Tbk has resulted in the detention of two tax officials by federal prosecutors in Jakarta. The inquiry, handled by the Jaksa Agung Muda Tindak Pidana Khusus, involves allegations of illicit transfer pricing and altered customs codes that systematically lowered the company’s corporate tax burden over a seventeen-year period.
How PT Toba Pulp Lestari Altered Export Classifications Between 2008 and 2025
Investigators discovered that PT Toba Pulp Lestari engaged in a sustained pattern of under-invoicing on overseas shipments sent to affiliated entities. Rather than declaring merchandise under its true market category, the firm altered its Harmonized System export codes during customs reporting.
According to investigative findings detailed by the Directorate of Investigation, shipments originating from Indonesia were routinely misclassified at the port of exit.
Saiful Bahri, Director of Investigation at Jampidsus, stated via Kompas that the export sales of pulp to affiliated parties were carried out through under-invoicing by reporting them at the export stage from Indonesia as paper grade pulp, bleached hardwood kraft pulp, or BHKP, despite the fact that in terms of characteristics, uses, and market value prices, those products were actually dissolving pulp.
By substituting paper grade classifications for high-value dissolving pulp, the company suppressed the recorded financial value of its exports.
Complicity and Arrests Within the Directorate General of Taxation
To secure the execution of these tax filings without regulatory interference, corporate representatives sought assistance from internal tax examiners. Prosecutors formally identified two state apparatus employees within the Directorate General of Taxation—identified by initials BP and SR—as active participants in the scheme.
Investigators established that both supervisors accepted financial payments from the pulp manufacturer in exchange for bypassing standard audit procedures, ignoring work paper reviews, and permitting the distorted tax filings to pass unchecked.
Preliminary Financial Damage and Ongoing Audit Proceedings
State financial losses stemming from the multi-year transfer pricing arrangement are currently pegged at an estimated Rp2 trillion.
Despite the steep preliminary estimate, prosecutors emphasize that the final fiscal damage remains subject to a formal, comprehensive calculation currently being compiled by state auditors.
Saiful Bahri, Director of Investigation at Jampidsus, stated via Kompas that the state financial losses in this case were still in the process of being calculated by the auditor team.
Both tax officials were taken into custody on the evening of their indictments.
The legal framework applied to the detained examiners includes Article 603 jo. Article 20 letter a or c of Law Number 1 of 2023 regarding the Criminal Code, alongside provisions of Law Number 31 of 1999 concerning the Eradication of Corruption Crimes as amended by Law Number 20 of 2001, with supplementary charges under Article 604.