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Jakarta Post

Focusing tax audits on high-net-worth individuals

  • Muhammad Fajar Nugraha and Yanuar Falak Abiyunus

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Jakarta   /   Mon, July 6, 2020   /  10:29 am
Focusing tax audits on high-net-worth individuals Illustration of wealth (Shutterstock/beeboys)

Taxes will play a more critical role in funding the post-pandemic recovery, as the government has to significantly increase expenditure to cope with the damage caused by the public health and economic crises. The biggest challenge, though, is that tax receipts have tended to decline due to the economic downturn. As of May, only 35.33 percent of the targeted tax revenue for fiscal year 2020 has been collected. Non-oil and gas income tax and VAT receipts fell by 10.38 percent and 7.95 percent year-on-year. For sustainable and just economic development, Indonesia urgently needs a robust taxation system. The tax revenue structure also shows a limited role of progressive taxation. Personal income tax (PIT), which has a progressive rate, only comprises less than 10 percent of total tax revenue (average 2005 to 2017), much lower than the Organization for Economic Cooperation and Developme...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.