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

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

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

Imposing the tax on virtual assets is a measure that appears to have no legal, economic or statistical basis, one expert told ITR
The EU has seemingly capitulated to the US’s ‘side-by-side’ demands. This may be a win for the US, but the uncertainty has only just begun for pillar two
The £7.4m buyout marks MHA’s latest acquisition since listing on the London Stock Exchange earlier this year
ITR’s most prolific stories of the year charted public pillar two spats, the continued fallout from the PwC Australia tax leaks scandal, and a headline tax fraud trial
The climbdowns pave the way for a side-by-side deal to be concluded this week, as per the US Treasury secretary’s expectation; in other news, Taft added a 10-partner tax team
A vote to be held in 2026 could create Hogan Lovells Cadwalader, a $3.6bn giant with 3,100 lawyers across the Americas, EMEA and Asia Pacific
Foreign companies operating in Libya face source-based taxation even without a local presence. Multinationals must understand compliance obligations, withholding risks, and treaty relief to avoid costly surprises
Hotel La Tour had argued that VAT should be recoverable as a result of proceeds being used for a taxable business activity
Tax professionals are still going to be needed, but AI will make it easier than starting from zero, EY’s global tax disputes leader Luis Coronado tells ITR
AI and assisting clients with navigating global tax reform contributed to the uptick in turnover, the firm said
Gift this article