Causes and consequences of corruption in tax administration: An Indonesian case study

This article uses an Indonesian case study (the Gayus case) to explore critical issues in the relationship between tax andcorruption. More particularly, it considers the causes and impact of corruption at tax administrative levels in Indonesia, andidentifies and evaluates strategies the Indonesian revenue authority (the Directorate General of Taxation, or DGT) hasadopted, or can adopt, to ensure opportunities for such corrupt activity are mitigated or eliminated. The article adopts aqualitative approach, utilising archival analysis supplemented by interviews and correspondence with key parties involved.After a broad introduction which outlines the nature, types and impact of corruption in revenue authorities, the articleidentifies the principles that typically underpin anti-corruption strategies in revenue authorities in developing countries,together with examples of some of the anti-corruption strategies employed. It then considers the nature of the corrupt activityexemplified by the Gayus case in Indonesia, how it arose, and how it came to light. This is followed by a consideration ofthe impact upon the organisation, how the DGT dealt with it and what changes came about as a result in terms of anticorruptionstrategies subsequently adopted and now operating in the DGT. The article concludes with a section on thelessons learned and prospects for the future, both in Indonesia and elsewhere in the Asia-Pacific region