Our Tax Forensic service helps companies, law firms, and law enforcement agencies trace, prove, and quantify the impact of suspected tax fraud — from compliance analysis to support for evidence in court.

We examine tax data, accounting data, and digital evidence in a structured way — from tax returns, tax invoices, and withholding slips, to the general ledger, emails, metadata, and audit trails — to reconstruct transactions and measure the tax exposure.

Our approach rests on six complementary pillars, so findings do not stop at a number but can be tested, explained, and defended legally.

Why Tax Forensic?

Tax Forensic is needed to:

✔Identify Fraud: Identify potential tax fraud.
✔State Loss: Help assess the value of the loss to the state.
✔Valid Evidence: Provide evidence that is legally valid.
✔Litigation Support: Deliver in-depth analysis to support litigation or law enforcement.
✔System & Control Improvement: Recommend improvements to tax systems and controls so that fraud does not recur.

The 6 Pillars of Tax Forensic

1. Tax Compliance Analysis

Assessing tax compliance in terms of form, substance, and reporting accuracy.

✔Formal Compliance: Checking whether the taxpayer has filed its tax returns on time and completely.
✔Material Compliance: Checking whether income, tax base, rates, tax calculations, tax credits, and taxes paid comply with the regulations.
✔Tax Reporting Accuracy: Checking whether the values in the tax return match the general ledger (GL), trial balance, financial statements, tax invoices, and withholding slips.

2. Tax Due Diligence

Mapping a company's tax history and risks.

✔Tax Audit, Assessment & Dispute Status: Tracing whether the company is undergoing or has undergone a tax audit, and whether any SP2DK, SKP, STP, objection, appeal, lawsuit, or other dispute remains unresolved.
✔Tax Risk Matrix: Rating the risk of each finding by financial materiality, likelihood, and urgency of follow-up.

3. Tax Fraud Investigation

Investigating patterns of fraud that reduce the tax owed.

✔Tax Evasion: Checking for manipulated financial statements, unreported sales, or fictitious expenses.
✔Tax Avoidance: Checking for unreasonable transfer pricing, thin capitalization, or aggressive foreign corporate structures.
✔Digital Tax Fraud: Checking for manipulated digital platform sales, false identities, concealed digital fund flows, or manipulated electronic records.

4. State Loss Quantification

Turning findings into figures that can be tested.

✔Tax Base Reconstruction: Reconstructing transactions to determine the income, turnover, tax base, or taxable basis that should have been used.
✔Tax Underpayment Calculation: Calculating the difference between the tax that should have been owed and the tax that was paid or reported.
✔Recurring Potential State Loss: Estimating the recurring financial impact if the same fraud pattern continues in future periods.

5. Digital Tax Evidence

Collecting and analyzing digital evidence while preserving its validity.

✔Digital Evidence Identification: Identifying the systems, devices, accounts, databases, and digital files that may hold relevant evidence.
✔Metadata & Audit Trail Analysis: Tracing who created or changed data, when journals, invoices, vendor masters, or documents were changed, and whether system logs are available and reliable.
✔Electronic Communications Analysis: Analyzing emails, instant messages, and other electronic communications to reconstruct transactions and relationships between parties.

6. Litigation Support

Preparing findings so they are ready to be tested in legal proceedings.

✔Case Assessment & Issue Mapping: Mapping the legal and tax issues in dispute.
✔Evidence Mapping & Correlation: Mapping the evidence that supports each fact, transaction, calculation, and argument.
✔Tax Calculation Validation: Making sure tax corrections, the tax base, underpayment calculations, and penalties can be reproduced and are supported by data and legal grounds.

Early Warning Signs of Tax Fraud (Red Flags)

Income & Corporate Income Tax Fraud

✔Income Understatement: Part of sales is not recorded; customer receipts go into accounts outside the books; turnover on the POS or marketplace is higher than in the tax report.
✔Fictitious or Inflated Expenses: Vendor invoices with no real services or goods; personal expenses charged to the company; service fees, royalties, or management fees without adequate substance.
✔Transfer Pricing Abuse: Affiliate transaction prices that do not follow the arm's-length principle; profit margins that do not reflect functions, assets, and risks; intangible transactions without adequate analysis.
✔Thin Capitalization: Unreasonable affiliate debt financing; interest expense that is large relative to the company's economic capacity; a debt structure that may be used to reduce taxable income.

VAT Fraud

✔Fictitious Tax Invoice: Tax invoices issued or used without an underlying transaction; suppliers that cannot be verified; documents not supported by evidence of delivery of goods or services.
✔DPP Manipulation: Sales reported at a lower value; discounts or returns without an adequate basis; transaction values that differ from the contract or payment without an acceptable explanation.
✔Carousel / Missing Trader Fraud: A chain of transactions through several entities, where one or more parties allegedly do not remit VAT while others claim tax credits.
✔Double Invoice / Dual Bookkeeping: Invoices with different values for the same transaction, or two bookkeeping systems showing different sales values without a legitimate reconciliation.

Regional Taxes, Customs & Excise

✔PBJT on Food/Beverages: Unrecorded cash sales; POS manipulation; unusual voids, refunds, or split bills; differences between actual sales and the PBJT tax base.
✔PBJT on Hotel Services: Walk-in transactions or reservations that do not enter the system; room values reported differently from actual transactions; reservation platform revenue that is not reconciled.
✔Customs Under-invoicing: Customs value reported lower than the transaction value that should have been used.
✔Customs Misclassification: HS codes or goods classifications suspected of not matching the goods' characteristics, resulting in lower customs rates or obligations.

Tax History

✔Tax Audit, Dispute & Assessment History: The company has undergone or is undergoing a tax audit, has a history of tax disputes or repeated corrections, has received SKPKB, SKPKBT, or STP of material value, has unresolved objection, appeal, or judicial review disputes, has audit results or tax assessments that remain unpaid or not followed up, and shows significant differences between the company's tax position and the tax authority's corrections.
✔Tax Governance & Compliance History: A history of late or unfiled tax returns, repeated amendments of material value, tax obligations that are inconsistent between periods, changes of tax consultant or administrator without adequate handover documentation, and no follow-up on the recommendations of earlier audits or tax reviews.

What We Need

For a thorough examination, we need:

✔DJP / Tax Administration Access: Official access to Coretax DJP and/or the company's relevant tax data, including periodic and annual tax returns, withholding slips, tax invoices, payments, DJP correspondence, SP2DK, audit letters, SKP, STP, and tax dispute documents. Purpose: analyzing tax compliance, identifying reporting differences, tracing audit history, and measuring potential tax exposure.
✔Digital Forensic & Data Analytics: Support from experts and/or digital forensic tools to acquire, examine, process, and analyze digital data in a structured way, including financial statements, GL, journals, emails, electronic documents, and audit trails. Purpose: identifying transaction anomalies, signs of data manipulation, transaction-related communications, and relevant digital evidence.
✔Financial & Accounting Data Access: Access to financial statements, trial balance, chart of accounts, GL, adjusting journals, AP/AR ledgers, asset registers, bank reconciliations, and transaction data for each audit period. Purpose: reconstructing transactions and reconciling accounting data with tax data.
✔System & Database Access: Access to ERP, accounting software, e-Faktur or related tax applications, POS, marketplaces, payment gateways, and other relevant systems, including master data, user activity logs, change history, and timestamps where available. Purpose: tracing transactions from the original source to accounting records and tax reporting.
✔Email & Electronic Communications: Access to company email, attachments, business conversations, and electronic communications relevant to the transactions or the investigation period. Purpose: building a chronology, identifying transaction instructions or approvals, and linking communications to transaction evidence.
✔Supporting Documents & Evidence: Contracts, invoices, tax invoices, purchase orders, delivery orders, proof of payment, bank statements, import/export documents, affiliate documents, and other supporting documents. Purpose: validating the existence of transactions, economic substance, relationships between parties, and their tax treatment.
✔Historical Tax Audit & Dispute Records: Tax audit history, SP2DK, SPHP, discussion minutes, SKP, STP, objection letters, appeal rulings, judicial review documents, and proof that obligations were settled. Purpose: identifying patterns of repeated corrections, dispute risk, and potential unresolved tax liabilities.
✔Key Personnel & Interviews: Availability of the Finance, Accounting, Tax, IT, and, where relevant, HR teams, as well as management, for interviews, clarification of transactions, and confirmation of findings. Purpose: understanding business processes, validating facts, and obtaining explanations for anomalies found.

Contact Us

Found irregularities in tax reporting, or facing a tax audit or dispute? Please contact our Tax Forensic team to discuss your needs.

End-to-end forensic & investigation solutions

Tax Forensic