TheJakartaPost
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As the government scrambles to shore up tax and excise revenues, a wave of corruption arrests targeting tax and customs officials has exposed deep governance problems within Indonesia’s revenue-collecting agencies. The Corruption Eradication Commission’s (KPK) recent raids have prompted Finance Minister Purbaya Yudhi Sadewa to carry out large-scale bureaucratic rotations at both the tax and customs offices. Yet questions remain over whether these measures can deliver lasting reform or meaningfully improve revenue collection.
Indonesia may face a tax revenue shortfall this year, as recent data show the country had realized only 74.62 percent of its annual tax target as of November, underscoring mounting difficulties in sustaining revenue growth amid global and domestic economic headwinds. The World Bank Group (WBG) has projected Indonesia's tax ratio, the share of tax revenue in gross domestic product (GDP), to fall to 9.4 percent in 2025, down from 10.1 percent in 2024. The downward trend is a worrying signal for future state spending, particularly as the government rolls out costly flagship programs that risk widening the fiscal deficit.
Indonesia will need to accelerate both revenue collection and government spending in the final months of this year, after realizing just over half of the 2025 outlook by the end of August. The Finance Ministry reported that state revenue reached Rp 1.64 quadrillion (US$98.61 billion) as of Aug. 31, or 57.2 percent of the outlook, and realized state spending of Rp 1.96 quadrillion (55.6 percent). This left the 2025 state budget with a deficit of Rp 321.6 trillion, equal to 1.35 percent of gross domestic product (GDP).
