The government has released the 2027 Macroeconomic Framework and Fiscal Policy Principles (Kerangka Ekonomi Makro dan Pokok-Pokok Kebijakan Fiskal/KEM-PPKF), outlining a policy agenda to underpin next year’s state budget. KEM-PPKF covers the fiscal strategy overview, development targets, and tax policy direction for 2027.
For businesses and investors, the document offers more than a glimpse into government spending plans. It provides an early indication of how Indonesia intends to balance investment climate, business strategy, tax compliance, and various available incentives.
What Is the KEM-PPKF 2027?
Prepared under the mandate of Law of the Republic of Indonesia Number 17 of 2003 concerning State Finance, the document outlines macroeconomic assumptions, revenue and expenditure projections, and policy strategies to support national development goals.
For 2027, the government has identified nine priority areas, including food security, energy and water self-sufficiency, education, healthcare, industrial downstreaming, infrastructure development, the people’s economy, poverty reduction, and national defense and security.
Macroeconomic Assumptions and Tax Revenue Targets
The government expects Indonesia’s economy to grow between 5.8% and 6.5% in 2027, exceeding the 5.4% growth assumption used in the 2026 state budget. Inflation is projected to remain manageable between 1.5% and 3.5%.
Against that backdrop, state revenue is expected to range from 11.82% to 12.4% of gross domestic product (GDP), while tax revenue is targeted at 10.02% to 10.5% of GDP.
These targets underscore the government’s continued reliance on taxation as the backbone of public finance. As a result, efforts to improve compliance and broaden the tax base are likely to remain at the center of fiscal policy.
Tax Policy Priorities for 2027
Several themes stand out in the government’s tax strategy for the coming year.
First, one of the government’s primary objectives is to expand the tax base by leveraging data and technology, particularly in sectors such as the digital economy, informal businesses, and the shadow economy.
Second, the government will continue to optimize the Coretax system while expanding the use of the Compliance Risk Management Integrated Risk Engine (CRM-IRE). These tools are expected to enhance taxpayer monitoring and revenue collection efforts.
Third, tax enforcement efforts will increasingly focus on taxpayer groups considered to pose higher compliance risks. These include large corporate groups, businesses engaged in related-party transactions, and high-net-worth individuals with significant economic activity.
Authorities also plan to use a multi-agency approach and review existing tax incentives to assess their effectiveness.
Strategic Incentives Remain in Place
Among several strategic tax incentives that will remain available in 2027 are government-borne tax incentives for geothermal projects and sovereign securities.
The government also pushes to develop a domestic semiconductor ecosystem. Policymakers are preparing a range of incentives, including tax holidays, interest subsidies, and super deductions of up to 300% for companies investing in research and development and workforce training.
The strategy signals a shift in tax policy, with taxation set to play an increasingly important role not only as a source of revenue but also as a policy tool for driving Indonesia's long-term economic development.
