Jakarta – The Publish What You Pay (PWYP) Indonesia Coalition strongly condemns the alleged bribery practices by PT Wanatiara Persada (WP), uncovered through a sting operation (OTT) by the Corruption Eradication Commission (KPK) last Friday. This case, involving the slashing of Land and Building Tax (PBB) obligations from IDR 75 billion to IDR 15.7 billion, constitutes a blatant theft of state funds amid the ongoing push for nickel downstreaming.
National Coordinator of PWYP Indonesia, Aryanto Nugroho, asserted that this IDR 59.3 billion tax manipulation is not merely an administrative violation, but a systemic crime resulting from collusion between business players and rogue tax officials.
“This is a stark portrait of illicit financial flows in the extractive industry. How can taxes be magically reduced by 80% merely through fictitious contracts and under-the-table negotiations? This practice proves that the nickel industry today remains far from the spirit of maximizing public welfare and has instead become a hunting ground for rent-seeking by a handful of elites,” emphasized Aryanto.
The Tip of the Iceberg
PT WP, a Foreign Investment (PMA) company with a majority stake held by Mining Metallurgy Ltd (Hong Kong), has highly complex transactions. PT WP is a PMA company operating in nickel mining, processing, and refining. The company operates on a 1,725.54-hectare concession on Obi Island, South Halmahera, North Maluku. Based on data from the Ministry of Energy and Mineral Resources’ Minerba One, the shareholding is divided 60% to the Hong Kong company, Mining Metallurgy Ltd, and 40% to domestic parties.
National Coordinator of PWYP Indonesia, Aryanto Nugroho, stated that the discovery of evidence amounting to IDR 6.38 billion is merely the entry point to uncover larger illicit financial flow practices.
The modus operandi of fictitious contracts revealed by the KPK’s OTT, with evidence valued at IDR 6.38 billion—including a IDR 4 billion bribe for tax reduction “negotiations”—is not an isolated phenomenon. According to PWYP Indonesia, fictitious contracts are often used to conceal intercompany transactions, which ultimately affect the basis for various other taxes. In the nickel sector, PMA companies like PT Wanatiara Persada that engage in exports should be subject to Article 22 of the Income Tax (PPh), which imposes a 1.5% tax on export value. If export values are manipulated through fictitious contracts, state revenue leakage occurs not only in the PBB but also in the Corporate Income Tax (PPh Badan), Export Income Tax (PPh Ekspor), and Value Added Tax (PPN).
PWYP Indonesia signals the potential for far greater state losses in other tax types, such as:
- Article 22 Export Income Tax (PPh): If contract values are manipulated, the calculation base for export tax must also be questioned.
- Corporate Income Tax (PPh Badan) & Value Added Tax (PPN): The use of fictitious contracts indicates potential transfer pricing schemes to shift profits to low-tax jurisdictions (tax havens).
- Royalties (PNBP): Manipulation of nickel volume or grade in contracts is often done to avoid rightful PNBP obligations.
“An 80% tax manipulation through fictitious contracts is not merely the work of rogue individuals but evidence of the fragile fiscal oversight system in the extractive sector. We signal that this IDR 59.3 billion state loss is just the tip of the iceberg of potential leakage from other taxes like Corporate and Export Income Tax, which may also be manipulated through transfer pricing schemes,” asserted Aryanto.
Corporate Crime and Beneficial Ownership Accountability
PWYP Indonesia emphasizes that law enforcement must not stop at the level of company executives or rogue tax officials. Given that PT Wanatiara Persada is a PMA entity (60% Hong Kong-owned), the investigation must focus on who ultimately benefits from this crime.
PWYP Indonesia urges the KPK to take progressive steps by integrating corporate accountability and ownership transparency:
“The KPK and the Attorney General’s Office must optimize the use of the Supreme Court Regulation (PERMA) No. 3 of 2025 on Corporate Crimes to prosecute PT Wanatiara Persada as a legal entity subject, which also serves as the entry point to thoroughly investigate the chain of command up to the Beneficial Owners, including controlling shareholders in Hong Kong. This step is crucial so that law enforcement does not stop at rogue field employees but is able to sever the chain of corruption command and reach the main controllers who are the true beneficiaries of this bribery and tax evasion scheme.”
EITI: A Blunt Transparency Commitment Becoming a Corruption Loophole
As an implementing country of the Extractive Industries Transparency Initiative (EITI) since 2010, Indonesia is bound by the EITI Standard (Requirement 4.1), which mandates mining companies to disclose detailed (disaggregated) tax payment data to close loopholes for illegal negotiations. However, PWYP Indonesia observes that this commitment has steadily regressed as the company’s compliance has declined in opening tax and royalty data under the pretext of taxpayer confidentiality, reducing this transparency initiative to a mere formality.
Weak government oversight and enforcement have created a dark space for underreporting practices and collusion between businesses and rogue officials. The sharp decline in EITI report participation in recent years shows that, without binding transparency, the extractive industry will remain vulnerable to illicit financial flows that harm state revenue.
PT WP is tangible proof of the impact of this non-compliance; although on the mandatory reporting list, PT WP did not submit its tax reports through the EITI mechanism during the 2022-2024 period. This lack of transparency became the “red carpet” for the bribery practices recently uncovered. Therefore, PWYP urges strengthening the legal basis of EITI through a Presidential Regulation that makes tax data reporting mandatory and binding, with strict sanctions, including license revocation, for noncompliant companies.
Socio-Ecological Impact and the Urgency of a Comprehensive Audit
This fiscal scandal adds to the long list of poor records in PT WP’s operational area on Obi Island, which has drawn international attention due to massive environmental damage, from deforestation to water pollution from heavy metal contamination, threatening community health.
PWYP Indonesia urges the government to immediately conduct a comprehensive tax audit of all corporate taxpayers in the nickel sector, as well as an independent environmental audit on Obi Island. The government must have the courage to take firm action by evaluating and revoking the business licenses of corporations proven to engage in systemic tax crimes and ecological destruction simultaneously.
“The state must not be defeated by corporations that plunder the people’s fiscal rights. Reforming nickel governance must prioritize socio-ecological justice, not merely economic growth figures,” concluded Aryanto.
Contact: farirahman@pwypindonesia.org