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Low commodity prices drag down state revenue
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Finance Minister Sri Mulyani Indrawati stands before the press for photoshoot on Mar. 25, 2024, prior to a press conference at the Finance Ministry building in Jakarta. (JP/Deni Ghifari)
T
ax revenue for the year to March 15 fell 3.7 percent year-on-year (yoy), the Finance Ministry has said, largely a result of companies seeking tax refunds for worse-than-expected business performances last year.
The government booked Rp 342.9 trillion (US$21.69 billion) in tax revenue from January to March 15. The ministry attributed the increase in tax restitution to a decline in global commodity prices that began last year.
“Our tax revenue experienced a lot of pressure because commodity prices began going down last year,” Finance Minister Sri Mulyani Indrawati said at a press briefing on Monday.
Companies operating in Indonesia pay corporate income tax each month based on an estimate determined by a formula outlined in the country’s tax law.
By the end of each calendar year, some companies may have paid more through the monthly estimates than they are actually obligated to, meaning they are eligible to seek tax restitution. Other companies, meanwhile, may have underpaid and will be required to make up the difference.
Read also: Govt opens 2024 with 8 percent drop in January tax revenue
The government paid out Rp 13.1 trillion in tax restitution in the first two and a half months of 2024. If the restitutions are excluded, tax revenue grew by 5.7 percent, ministry data shows.
