Monitoring the Super-Rich: The Effects of Indonesia’s Tax Office on High-Wealth Individuals

Himawan Saputro

Bulletin of Indonesian Economic Studies, 2025, vol. 61, issue 1, 61-122

Abstract: I study the effects of monitoring high-wealth individuals (HWIs) on tax compliance and revenue. I exploit quasi-experimental variation generated by the implementation of a special tax office for HWIs in 2009, which monitored Jakarta residents with gross assets of more than Rp 100 billion (around $10 million). I compare the reported income and income taxes of HWIs administered by the HWI office and HWIs administered by ordinary tax offices before (2007–08) and after (2010–14) the HWI policy was in effect. I find that the reported income and the income taxes of HWIs administered by the HWI office decreased by 43.9% and 40.5%, respectively, over six years relative to those of HWIs administered by ordinary tax offices (Kantor Pelayanan Pajak Pratama). The results support the literature predicting that heightened tax scrutiny may lead HWIs to underreport income as a strategic response.

Date: 2025
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DOI: 10.1080/00074918.2024.2359512

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Bulletin of Indonesian Economic Studies is currently edited by Firman Witoelar Kartaadipoetra, Arianto Patunru, Robert Sparrow, Sarah Xue Dong and Sean Muir

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