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Indonesia: Tax Corruption Verdict to Be Appealed, New Charges to Be Laid

(Jan. 31, 2011) A former junior tax official in Indonesia, Gayus Tambunan, who is at the center of a huge corruption scandal involving allegations relating to the acceptance of bribes from a number of companies in exchange for favorable tax treatment, has registered an appeal against his conviction and sentence of seven years' imprisonment. Prosecutors had previously filed an appeal as the sentence was significantly less than the 20 years that had been sought. (Gayus Appeals Verdict, THE JAKARTA POST (Jan. 24, 2011), Under Indonesian law, prosecutors can appeal if the sentence is less than two-thirds of that sought. (Mariel Grazelle, Gayus Sentence Unsatisfactory: Prosecutor Amari, THE JAKARTA POST (Jan. 20, 2011),

The high profile case has already resulted in two trials of Gayus. In the second trial in the South Jakarta District Court, Gayus was found guilty on January 19, 2011, of bribing a judge and law enforcement officials to secure his acquittal on corruption charges in the first trial, which concluded in March 2010. He was also convicted of misusing his authority by accepting tax appeals from a major seafood company, which resulted in the Tax Directorate refunding tax payments, causing a loss of Rp570 million (about US$63,000) to the government. Gayus was also convicted of lying about his wealth, which is said to include Rp28 billion (about US$3.1 million) in bank accounts, although the charges were criticized for not tracing the source of that wealth. In addition to the seven-year prison sentence, Gayus was ordered to pay fines of Rp300 million (about US$33,000). (Heru Andriyanto, Breaking News: 7-Year-Sentence for Gayus Tambunan, JAKARTA GLOBE (Jan. 19, 2011),
; Tom Allard, Seven Years' Jail for Indonesian Taxman, THE SYDNEY MORNING HERALD (Jan. 20, 2011),

The sentence and the general handling of the case have been widely criticized. (Heru Andriyanto & Nivell Rayda, Outrage at Gayus's 7-Year Sentence, JAKARTA GLOBE (Jan. 20, 2011),
.) The panel of judges said that it could only act on the four charges in the indictment, which did not include a number of corrupt activities to which Gayus had confessed, including payments he claimed to have received from almost 150 companies. (Tom Allard, supra.) In addition to the appeal, a third trial of Gayus is now being prepared, with prosecutors intending to bring charges of money laundering and the bribery of prison guards who allowed Gayus to leave his cell and travel overseas while awaiting the previous trials. (Farouk Arnaz, Heru Andriyanto, & Camelia Pasandaran, Further Charges Ready for Gayus, Indonesia Prosecutors Say, JAKARTA GLOBE (Jan. 27, 2011),

It is estimated that the tax avoidance activities cost the state Rp7 trillion (about US$776 million). (Id.) The documents of 151 companies whose tax appeals were handled by Gayus will now be examined by public officials from four institutions – the office of the Director General of Taxation, the National Police, the Corruption Eradication Commission, and the Development and Finance Surveillance Agency. (Dina Indrasafitri & Nani Afrida, Gayus Fallout: 151 Local and Foreign Firms to Be Probed, THE JAKARTA POST (Jan. 26, 2011),
; Esther Samboh, Multi-Institution Officials to Handle 151 “Gayus” Documents, THE JAKARTA POST (Jan. 26, 2011),