OVERVIEW

An ambitious target was set by the Jokowi Administration at the end of 2014, as the president announced that the State would seek to secure IDR 249.5 trillion in tax revenues over the following year. Indeed, several strategies were formulated so that this ambitious target could be met. Unfortunately however, 2015’s first semester bore witness to a global financial slowdown, which prompted the government to alter its priorities and declare that investment was now its new priority, while the tax-revenue target could take a back seat.

With this end in mind, a number of ideas have been tabled. One of these initiatives aims to boost state revenues derived from tax without harming the country’s investment climate through the introduction of a tax-amnesty program. Under such a program, taxpayers (both individuals and businesses) who are blighted by outstanding payable taxes (pajak terutang) are afforded the opportunity to receive a pardon regarding their tax liabilities. The rationale behind this legal instrument is that taxpayers are likely to begin complying with their tax liabilities in the wake of being granted a tax amnesty, and state revenue will thus be positively affected in the long run.