Gibran Highlights Trade Misinvoicing Practice: Tax Leakage Costing the Country Hundreds of Billions of US Dollars

JAKARTA, KOMPAS.com - Indonesia’s Vice President Gibran Rakabuming has highlighted the issue of trade misinvoicing, or the manipulation of international trade invoices.

According to Global Financial Integrity, trade misinvoicing involves the falsification of trade invoices that allows money to be transferred across borders through the manipulation of values, volumes, or types of goods on the invoices.

This practice is typically used to avoid taxes, customs duties, launder money, or hide the proceeds of economic crimes.

Gibran assessed that the existence of trade misinvoicing can cause capital and wealth to leak out of Indonesia to foreign countries.

According to Gibran, if there are transactions flowing abroad that are not reported, this will create discrepancies in recordings, thereby opening loopholes for the circulation of illicit funds.

“This is a form of cheating that seems technical but has very real impacts; the cheating through trade misinvoicing or customs invoice manipulation varies from under-invoicing to over-invoicing,” he added.

Over nine years, he estimated, the value of trade misinvoicing reached hundreds of billions of US dollars.

“Meanwhile, the value of over-invoicing in exports is recorded at 252 billion US dollars, or 25 billion US dollars per year, with the largest sector being the trade in precious metal-plated metal scrap and smartphones,” he continued.

He stated that cases of trade misinvoicing constitute a form of legal violation that causes the country to suffer considerable losses.