Indonesia to Expand Tax Base, Not Raise Rates, Says Finance Minister

Indonesia's Finance Minister, Purbaya Yudhi Sadewa, has announced a strategic shift away from increasing tax rates, signaling a medium-term focus on broadening the tax base to strengthen state revenue. This approach prioritizes leveraging data and technology to capture revenue from the digital economy, shadow economy, and informal sectors.

During a plenary session at the House of Representatives, Purbaya explained that tax base expansion is the government's chosen strategy. This involves utilizing advanced data analytics and technological tools to identify and engage taxpayers who are currently outside the formal tax net. The aim is to create a more inclusive and efficient tax system that reflects the evolving economic landscape.

In the customs and excise sector, the government plans to implement a multi-pronged strategy. This includes enhancing digitalization for services and monitoring, conducting more robust audits and enforcement actions, and actively combating the illegal import and circulation of excisable goods. These measures are designed to maximize revenue collection while ensuring a conducive environment for investment, supporting exports, and facilitating business operations.

Indonesia recorded Rp1,035.7 trillion in tax revenue in the first half of 2026, a 24.6 percent increase from the previous year and equivalent to 43.9 percent of the annual target. While the full-year projection of Rp2,310.8 trillion is expected to fall slightly short of the Rp2,357.7 trillion target, the anticipated shortfall is significantly less than in previous years, indicating progress in revenue collection efforts.

“

Regarding the government's medium-term strategy to strengthen state revenue, we can say that the tax strategy will focus on expanding the tax base rather than simply increasing tax rates.