Jakarta Considers VAT Cut to Stimulate Consumption Amid Falling Tax Revenue

• Indonesia’s Finance Ministry is considering reducing VAT to boost consumption amid declining tax collection.
• The decision depends on economic performance and revenue collection by year-end.
• Indonesia’s tax-to-GDP ratio remains low, dropping to 10.08% in 2024, with a government target to increase it to 13-14% by 2029.
• Tax collection has fallen, achieving only 62% of the annual target so far, with significant declines in corporate income tax and VAT.
• The decline in tax revenue is partly attributed to tax restitution (refunds of previously paid taxes).

Source: thestar.com.my

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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