Indonesia: Indonesia to optimise tax revenue and separate tax authority from the Ministry of Finance

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Indonesia: Indonesia to optimise tax revenue and separate tax authority from the Ministry of Finance

karyadi.jpg
Tanuwijaya-Chaterine

Freddy Karyadi

Chaterine Tanuwijaya

The Indonesian Ministry of Finance has revealed that Indonesia's net tax revenue for 2015 was only IDR1,055 trillion, about 81.5% of the target set out in the 2015 Budget. Although the figure is an all-time high, it still represents a shortfall compared with budgetary projections.

In the release announcing the news, the Ministry of Finance states that economic growth was estimated to be about 4.73% with inflation around 3.1%. The realised average currency exchange rate towards USD is Rp.13,392/USD, weaker than in 2014 (when the exchange rate was Rp.12,500/USD). Realised state income is Rp.1,491.5 trillion (a total from tax income, customs and duty and non-tax state income). The net tax income in 2015, after calculating the tax restitution to taxpayers is Rp.1,055 trillion; about 81.5% from the target in the 2015 budget.

In response to the weakening percentage of realised state income, the Minister of Coordinating of Politics, Law and Security, who is also the Chairman for the Committee for the Prevention and Eradication of Money Laundering, mentions that the Anti-Corruption Commission (KPK) should chase money laundering cases and cooperate with the Directorate General of Tax for strict supervision for taxpayers to avoid tax evasion. He added that tax evasion may be handled by the Anti-Corruption Commission, the police or a prosecutor.

In 2016, the Indonesian government plans to separate the tax authority from the Ministry of Finance and to issue a revised General Provision of Tax Law that is planned to be discussed this year. If the revised law is passed in 2016, the new autonomous tax authority is planned to start work effective 2017-2018. This separation is expected to increase state income by virtue of the 'new' authority being more flexible in doing its job, as well as quicker actions and approvals being easier to complete, such as administrative tasks, operational budget issues or dismissal procedures of officials.

Freddy Karyadi (fkaryadi@abnrlaw.com) and Chaterine Tanuwijaya (ctanuwijaya@abnrlaw.com), Jakarta

Ali Budiardjo, Nugroho, Reksodiputro, Counsellors at Law

Website: www.abnrlaw.com

more across site & shared bottom lb ros

More from across our site

Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
JBS, the biggest meat company in the world, allegedly used Luxembourgian ‘mailbox companies’ to avoid taxes between 2019 and 2022
Despite the conviction of Jessa Dabalos, the Tax Practitioners’ Board’s investigative work continues with five outstanding PwC scandal probes
Heads of tax need to push their teams forward as strategic business advisers to add value across their organisations, says Sandy Markwick
Scott Bessent reportedly felt undermined by Musk naming Gary Shapley as acting IRS commissioner; in other news, Baker Tilly will combine with a top 15 US firm
The promise of nine years’ tax certainty and a ‘rational and pragmatic’ government process makes APAs a no-brainer, Indian tax advisers tell ITR
Despite garnering significant revenues from multinationals, Italy’s digital services tax presents pressing double taxation issues, say Stefano Simontacchi and Francesco Saverio Scandone of BonelliErede
ITR’s research shows that in-house tax counsel in Asia also feel underserved by their advisers’ international networks
World Tax global head of research Jon Moore tells ITR how his team spots standout submissions, and gives early statistical insights into this year’s entries
Gift this article