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Better tax collection needed as 2020 tax revenue target ‘hard to achieve’
The government expects to collect Rp 1.68 quadrillion (US$120.65 billion) in tax revenue this year.
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Tax compliance: A number of taxpayers file their returns with the Jakarta Tax Office in Tanah Abang, Central Jakarta. (JP/Nurhayati)
T
he government will need to strengthen its tax collection efforts this year following a yawning tax revenue shortfall that occurred last year.
The tax office collected Rp 1.33 quadrillion (US$97.5 billion) in tax revenue last year, 84.4 percent of the full-year target, causing a shortfall of Rp 245.5 trillion, the worst in at least the last five years.
Sluggish global growth caused contractions in manufacturing industry and the mining sector that reduced their tax contribution by 1.8 percent and 19 percent year-on-year (yoy), respectively, Finance Ministry data showed.
“We expect that there will not be any significant changes in tax collection as [global] uncertainty still looms in 2020,” Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo wrote in a statement on Tuesday.
“To reach the 2020 tax revenue target, the collection amount must be pushed higher by up to 23.3 percent from 2019’s figure. This will be hard to realize,” he added.
The government expects to collect Rp 1.68 quadrillion in tax revenue this year to fund its infrastructure as well as human-resource development projects, among other things.
At the same time, Indonesia’s economy is expected to grow by 5.1 percent this year, according to an International Monetary Fund (IMF) projection in October, far lower than the government’s target of 5.3 percent stipulated in the 2020 state budget.
