Indonesia: Sri Mulyani concerned about slow growth in tax revenue

  • Finance Minister Sri Mulyani Indrawati has expressed concern about a slowdown in tax revenue in 2019. By May 19, the state had collected IDR727.7tr from taxes and customs, or 31.9% of the full-year target stipulated in the 2019 state budget.
  • That marked a 5.7% y/y increase, far lower than the growth rate of 14.5% y/y from Jan 18 – May 18.
  • The minister appeared particularly worried that income tax from the oil and gas sector only grew 2.4% to IDR496.6tr.
  • she added, the ministry was more cautious in managing the state budget, particularly revenue collection, because the growth in nontax revenue was also weakening at 8.6%, lower than 18.1% growth in the same period in 2018.
  • In 2019, nontax revenue was still supported by revenue from state assets managed by Bank Indonesia. “Without the contribution from BI, nontax revenue was flat. This indicates that [revenue from] natural resources is under pressure,” Sri Mulyani added.
  • Director General of Taxation Robert Pakpahan admitted that the tax revenue performance was not as good as in 2018 due to the economic slowdown and because of government policies.
  • He said all tax revenue components had slowed down in 2019, and value-added tax (VAT) and income tax from luxury goods sales (PPnBM) dropped 4.4%, particularly due to a policy of accelerated tax refunds.

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