Indonesia: Finance minister to increase ratio of taxes to GDP target to 16% by 2019 – 12 Jul 2017

  • Finance Minister Sri Mulyani Indrawati said on 12 Jul 17 that Indonesia will increase the ratio of taxes to GDP target to 16% by 2019 – from 10.3% currently – as part of the government’s plan to reform the tax system.
  • “We do realize that we need to increase the tax ratio without burdening the economy amid the ongoing tax reform,” she said. The Directorate General of Taxes has started the reform process internally by simplifying its IT systems and administration and business processes to increase tax revenue.
  • The finance minister also said that the government will increase tax revenue by working with foreign authorities to prevent tax evasion. Recently, the government reached a tax settlement with Alphabet’s Google following a months-long dispute over allegations that the tech giant had not paid enough annual payments to the government.
  • Indonesia is not the only Asian economy that is struggling with low tax collection to support its ambitious development plans, Mitsuhiro Furusawa, the International Monetary Fund’s deputy managing director said at the same event.
  • “Along with most other Asian countries, Indonesia needs to collect more tax and avoid tax competition with other countries,” Furusawa said.

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