This paper examines the optimal decision on privatization policy under asymmetric information when the government is not able to know about the post privatization cost of the privatized firm. We propose the incentive compatible tax mechanism and show that this mechanism can achieve the efficient decision on privatization under incomplete information, which is the same result with complete information. We also extend the analysis into the model where the government faces budget constraint under asymmetric information, and show that the proposed mechanism also generates the efficient decision on privatization policy, which can reduce the informational rent of privatized firm.