Tax Collection Improves, but Not Enough to Meet 2018 Target

JULY 11, 2018

Jakarta. Indonesia, long weak in tax collection, is collecting significantly more this year than in 2017, but still will fall short of the 2018 target, the tax office chief said on Tuesday (11/07).

In January-June, the government collected Rp 581.5 trillion ($41 billion) of taxes, a 14 percent increase from last year, Robert Pakpahan told a news briefing. The figure excludes revenue from excise tax and corporate tax payments by oil and gas firms.

"We are projecting tax revenue growth of 17-18 percent at the end of this year," he said.

That is way above last year's 4 percent increase but below this year's 23 percent target.

Pakpahan said 2018's stronger pace stemmed from improving economic growth, better tax administration and "voluntary compliance, surveillance and the effect of the tax amnesty."

An amnesty program in Southeast Asia's largest economy from July 2016 through March 2017 helped reveal over $360 billion of previously hidden assets. The government promised to follow up the amnesty with a crackdown on tax evasion, a chronic problem in Indonesia.

Raising the amount of tax collected is a key item on President Joko "Jokowi" Widodo's main agenda, in order to help finance his ambitious infrastructure-building program and reduce dependence on foreign inflows.

According to tax office data, revenue from corporate tax by the mining industry in the first half of 2018 soared 80 percent from a year earlier to Rp 38.8 trillion.


Indonesia tax