Overview

Tax plays a hugely important role as the largest source of income which is generally used to develop a country. In Indonesia, of the total IDR 1,750.3 trillion in state revenue generated in 2017, tax made a contribution of around 85.6% to this figure or around IDR 1,498.9 trillion. In contrast, non-tax state revenue only contributed around 14.3 % or IDR 250 trillion to state coffers, while grants amounted to only 0.1% or IDR 1.4 trillion.[1] 

Unfortunately, tax collection in Indonesia is not without its problems and hurdles. Tax avoidance, tax aggression and/or the use of tax havens by taxpayers has resulted in an ineffective tax regime which in turn means that state revenues are not as high as they should be. In fact, actual tax revenues during 2015 and 2016 ultimately only amounted to 83.3% and 83.5% respectively of the total projected tax revenues.[2] Moreover, even the implementation of the 2017 tax-amnesty program did not fully resolve the problem of tax collection in Indonesia.[3]