Indonesia’s push for a third tax amnesty has gained traction after its parliament included an amendment to the Tax Amnesty Law in its 2025 priority legislative agenda. While the details remain undisclosed, the legislative body frames it as a way to improve taxpayer compliance and boost revenue to support President Prabowo Subianto’s agenda.
But introducing another tax amnesty is neither justifiable nor effective. Instead of solving Indonesia’s tax challenges, it risks long-term damage by further normalising noncompliance and eroding public trust in the system. Worse, it puts Indonesia at odds with global efforts to strengthen enforcement and create a fairer taxation system.
Indonesia has already implemented two tax amnesties, introducing the second in 2022 despite previous government assurances that the 2016 amnesty would be a one-time-only measure. International experience shows that repeated tax amnesties are less effective in raising revenue, a trend reflected in the sharp decline in participation and funds collected between the first and second rounds in Indonesia.
Taxpayer participation decreased by 74 per cent between amnesties from 956,000 to 247,918. Declared assets, redemption payments and repatriated funds also declined by 88 per cent, 55 per cent and 59 per cent respectively. Given this trend, a third amnesty would likely see even lower participation.
The government has done little to follow up on these disclosures with robust enforcement measures. A substantial portion of the fines collected in the second round came from individuals who had previously participated in the first amnesty. This suggests that many taxpayers either withheld information or continued evading taxes, emboldened by the lack of accountability and inadequate post-amnesty audits. Large-scale tax evaders seem to operate under the assumption that authorities lack the technical expertise or legal power to recover assets stashed abroad. This pattern of weak enforcement and repeated amnesties raises broader concerns about their effectiveness in improving tax compliance.
The IMF finds that tax amnesties rarely work, often reducing long-term revenue collection and compliance. Only countries that have paired them with more robust enforcement and improved tax administration have seen any success.
Indonesia attempted to justify its second amnesty with the introduction of the Automatic Exchange of Information (AEOI), a global system expected to strengthen enforcement and curb offshore tax evasion, arguing that access to AEOI data would improve oversight compared to the first amnesty. The proposed third amnesty lacks even this rationale. It offers no new enforcement mechanisms, transparency measures or structural reforms to ensure better compliance.
Beyond its questionable effectiveness, implementing another tax amnesty undermines global efforts to strengthen tax systems and combat evasion. While Indonesia pursues this path, global tax politics are moving towards greater transparency, stronger enforcement and fairer taxation.
Since the 2008 financial crisis, global efforts to close tax loopholes have gained momentum, driving major policy transformations. Two key initiatives have emerged with the shared goal of making tax systems fairer.
In late 2023, the UN General Assembly, led by the African Group, passed a draft resolution for a UN Framework Convention on International Tax Cooperation to give developing countries a stronger voice in shaping global tax rules. An ad-hoc committee outlined key guidelines in 2024, with negotiations set to continue over the next three years to tackle issues like tax evasion by high-net-worth individuals.
At the 2024 G20 Summit in Brazil, leaders proposed a 2 per cent wealth tax on the ultra-rich to curb tax avoidance. Despite opposition and implementation challenges, this move demonstrates a growing commitment to global tax fairness.
Indonesia’s reliance on repeated tax amnesties undermines these global efforts. Rather than closing loopholes, it offers tax evaders another escape route, legitimises evasion and illicit financial flows and widens inequality. Even during Indonesia’s first amnesty, the Tax Justice Network warned that it weakened global tax transparency when other countries were tightening enforcement. Another amnesty would once again put Indonesia at odds with the international push for fairer taxation.
Indonesia should instead focus on advocating for fairer individual taxation, particularly by implementing a more effective and well-designed tax framework for high-net-worth individuals. Given that many past amnesty participants were from this group, a stronger enforcement mechanism targeting them would be a more sustainable approach than repeatedly offering tax forgiveness. Failing to strengthen enforcement will deepen the regressivity of Indonesia’s tax system, placing a greater burden on compliant taxpayers while allowing the wealthiest to continue evading taxes.
Indonesia must move beyond short-term amnesties and focus on sustainable tax reforms. Doing so will not only strengthen Indonesia’s domestic integrity but also position the country as a strategic player in global tax fairness, especially as global taxation arrangements are increasingly prioritising inclusivity.
Yosephine Uliarta is Master’s student at the Crawford School of Public Policy, The Australian National University. She was formerly a research analyst at the Center for Indonesia Taxation Analysis.
Andi Mohammad Ilham is Graduate of the School of Government and International Relations, Griffith University. He is also a tax researcher at MMSTax Consulting, Indonesia.
