Indonesia Plans to Levy VAT on Toll Road Services by 2028

The Indonesian government, through its Directorate General of Taxes, is signaling a significant shift in its fiscal policy by planning to introduce Value Added Tax (PPN) on toll road services. This move, outlined in the Directorate General's 2025-2029 Strategic Plan, is slated for regulatory finalization by 2028. While currently no such tax is levied, and the public remains unaffected, the intention is clear: to strengthen the tax system and ensure greater fiscal resilience.

Inge Diana Rismawanti, Director of Tax Counseling, Services, and Public Relations, emphasized that this initiative aligns with broader goals of expanding the tax base proportionally and maintaining equitable tax treatment across various services. Crucially, it aims to bolster the sustainability of public funding for infrastructure development, a cornerstone of our national progress. The government assures that any future implementation will prioritize fairness, legal certainty, administrative ease, and consideration for the public's purchasing power.

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So far, there are no regulations governing the collection of PPN on toll road services. Therefore, there have been no changes in taxation applied to the public.

This planned PPN on toll roads is part of a larger strategy to modernize Indonesia's tax system. The 2025-2029 plan also includes provisions for taxing overseas digital transactions and implementing a carbon tax. From our perspective at Tempo, this reflects a determined effort to create a more just and sustainable fiscal framework. While the specifics and timing are still under development, the direction is set: to ensure that all sectors contribute more equitably to national development, supporting the infrastructure that connects our vast archipelago and drives economic growth.

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The issue of PPN collection reflects the direction of strengthening future policies, especially in expanding the tax base more proportionally, maintaining equal tax treatment across service types, and supporting fiscal sustainability in financing development, including infrastructure.