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Indonesia Seeks 20% Boost In Tax Revenue

Thursday, February 25, 2010

During a seminar, Indonesia’s Director General of Taxation, Mochammad Tjiptardjo, announced that the government is formulating strategies to reach its tax revenue target of IDR1,000 trillion (USD107.5bn) in 2013.

To get from the tax revenues of IDR611 trillion budgeted in 2010, to the IDR1,000 trillion target by 2013, would mean, he said, that tax revenues will need to increase by almost 20% per year. As Indonesia’s normal average annual tax revenue growth has been set at around 12%, the government will require an additional effort of up to 8% per year to achieve its objective.

Mochammad Tjiptardjo laid down four policies the government will pursue to achieve the sought-for tax revenue increases. Incentives will be provided for companies in selected sectors; the present policy of detailing and categorizing taxpayer profiles will continue; the enforcement of regulations against tax evaders will be pursued; and there will be additional reforms in tax administration.

In the first policy mentioned, the business sectors chosen for incentives would be those already providing significant tax revenues, or in which it is believed there is potential for growth, including, it was said, mining, financial services and construction. It was also proposed that small and medium-sized enterprises should be provided with incentives in order to promote their growth.