The Taxation Directorate General will focus on expanding Indonesia’s tax base next year in order to meet a tough revenue target for 2020 amid an economic slowdown.
The Finance Ministry’s director-general of taxation, Suryo Utomo, said the tax authority would make on-the-grounds efforts to expand the country’s tax base while continuing to monitor existing taxpayers.
“Going forward, tax offices will cover their own jurisdiction according to our data and compliance risk management [principles],” Suryo said in a discussion held in Jakarta on Monday. “We will also think about how to make the public understand the need to expand the tax base.”
Indonesia’s tax to GDP ratio has been the lowest among its regional peers, standing at 10.7 percent in 2017 and lower than Malaysia’s 13.1 percent and Thailand’s 14.8 percent, according to data from the World Bank.
The International Monetary Fund (IMF) has recommended that for a country the size of Indonesia, the tax to GDP ratio should be around 15 percent for it to sustainably finance the government’s development agenda.
The government aims to collect Rp 1.86 quadrillion (US$ 132.49 billion) in tax revenues in 2020, which also includes customs receipts. The figure is a 13.5 percent increase from the Rp 1.64 quadrillion in revenues it expects to collect this year.
As of the end of October, Indonesia’s tax revenue stood at Rp 1.17 quadrillion, a 1.12 percent growth from the same period last year, Finance Ministry data revealed.
Center of Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo said he appreciated the tax authority’s bottom-up efforts, saying that the move captures “the essence” of expanding the tax base.
He went on to emphasize the need for the country to establish a single identification system for all Indonesian to enable more accurate taxpayer profiling by the tax authority.
The government earlier said that the expansion of the tax base will be carried out, among other methods, through the extensification of personal taxpayers who run their own business.
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