Investigating the Correlation Between Formal Tax Law Violations and the Manifestation of Tax Crimes in Batam, Indonesia

F Fetri; Rizki Tri Anugrah  Bhakti; Dwi Afni Maileni

doi:10.58905/jse.v6i2.768

Authors

F Fetri Universitas Riau Kepulauan, Batam, Indonesia
Rizki Tri Anugrah Bhakti Universitas Riau Kepulauan, Batam, Indonesia
Dwi Afni Maileni Universitas Riau Kepulauan, Batam, Indonesia

DOI:

https://doi.org/10.58905/jse.v6i2.768

Keywords:

Batam, Formal Compliance, Legal Certainty, Tax Crime, Ultimatur Remedium

Abstract

This study examines how formal (administrative) tax non-compliance may, under specific legal and procedural conditions, escalate into tax crimes in Indonesia, using Batam as a case study. Batam is a free trade zone with intensive cross-border transactions and stringent VAT documentation requirements, making it a relevant setting for observing the administrative–criminal boundary in enforcement practice. Employing normative legal research, we analyze statutes and implementing regulations (including KUP provisions on Articles 38, 39, and 39A), OECD guidance as a comparative analytical lens and selected Indonesian court decisions (2020–2025) to map escalation thresholds and taxpayer safeguards consistent with the ultimum remedium principle. The findings suggest that formal violations, such as late or non-filing, deficient bookkeeping, and documentary irregularities, primarily serve as compliance-risk signals and should typically receive administrative attention. Criminal exposure becomes plausible only when these violations are accompanied by qualifying elements such as intent (dolus), patterned repetition, falsification/forgery, and demonstrable fiscal consequences supported by preliminary evidence procedures. Overly expansive criminalization may undermine legal certainty, taxpayer trust, and investor confidence. We recommend standardizing escalation indicators, strengthening the consistency of preliminary evidence assessment, and enhancing taxpayer legal literacy and administrative rectification pathways to ensure a fair and measurable boundary between administrative sanctions and criminal prosecution.

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