Indonesia’s tax revenue-to-GDP ratio, or tax ratio, remains low and be improved to accelerate fiscal capacity.
In the 2026 Draft State Budget (APBN), the government has set a tax revenue target of Rp2,357.7 trillion, up 13.5% from the 2025 outlook of Rp2,076.9 trillion.
However, past trends show that Indonesia’s tax revenue performance has been inconsistent, sometimes meeting targets, sometimes falling short, leaving the country with one of the lowest tax ratios in the region.
Citing OECD data, in 2023 Indonesia’s tax ratio reached 12%. This figure remains below other countries such as Malaysia (13.1%), Singapore (13.7%), China (20.4%), South Korea (28.9%), and Japan (34.4%).
Deputy Director of the Institute for Development of Economics and Finance (Indef), Eko Listiyanto, stated that the long-standing strategy the government must refine to boost tax revenue is improving the tax database. At present, the expansion of the tax database has not been optimal due to the limited data available to the Directorate General of Taxes.
“To expand the tax database, the Directorate General of Taxes cannot work alone. It must collaborate with third parties, such as the banking sector,” Eko told SUAR in Jakarta (August 20, 2025).
“To expand the tax database, the Directorate General of Taxes cannot work alone. It must collaborate with third parties, such as the banking sector,” said Eko.
He said that so far the government has only focused on setting tax targets without improving the tax database. Going forward, the tax base must first be strengthened before setting tax targets.
Another strategy to boost tax revenue is to refine the Coretax system. Since its launch in January 2025, the system has been far from perfect and has received much criticism.
The implementation of Coretax can run smoothly only if it receives updated data from taxpayers.
“The Directorate General of Taxes must pay serious attention to the Coretax system. The system must function properly. The necessary updates may include taxpayers’ addresses and business types,” said Eko.
A new strategy that could be implemented by the Directorate General of Taxes in the future to keep revenue targets on track is to openly separate individual taxpayers (WPs) who have a Taxpayer Identification Number (NPWP) and those who do not. Individual taxpayers without an NPWP would be subject to higher income tax rates compared to those who have one.
However, according to Eko, what is happening now is that the Directorate General of Taxes is still not transparent. There have been cases in the regions where an individual taxpayer was charged a higher tax rate even though they already had an NPWP.
Researcher at the Center for Strategic and International Studies (CSIS), Deni Friawan, stated that the government’s revenue target is also considered ambitious. The government aims for a 10% increase in total revenue, primarily from a 13% increase in tax revenue.
In fact, according to CSIS, the average increase in tax revenue so far has only been around 5%–6%. If the target is not met, the shortfall may potentially be covered through new debt—which would further increase fiscal pressure.
“Only 17 million out of 155 million workers pay taxes. Our tax base is still very narrow, making it difficult to push for a sharp increase in revenue in a short period of time,” said Deni.
Benediktus Krisna Yogatama
Executive Director of the Indonesian Employers Association (Apindo), Danang Girindrawardana, said that the government needs to provide tax policies that are acceptable to the business community—such as granting tax relaxations for priority sectors that have already made significant contributions to state revenue.
“The government must determine which sectors can be given tax relaxations and engage in discussions with the business community,” he told SUAR in Jakarta (August 20).
National Economic Performance
Minister of Finance Sri Mulyani Indrawati stated that the tax revenue target of IDR 2,357.7 trillion in the 2026 Draft State Budget (RAPBN) has taken into account projections of improved national economic performance, tax sustainability, as well as challenges and potential.
The IDR 2,357.7 trillion target includes income tax (PPh) revenue of IDR 1,209.4 trillion, up 15% compared to last year. Meanwhile, value-added tax (VAT) and luxury goods sales tax (PPnBM) are targeted at IDR 995.3 trillion, an increase of 11.7% from the previous year.
The target for land and building tax (PBB) revenue in 2026 is IDR 26.1 trillion, down 13.1%. Other taxes are projected to contribute IDR 126.9 trillion. In addition, the government has also set a target for customs and excise revenue of IDR 334.3 trillion for next year.
To achieve the customs and excise revenue target, the government has prepared several measures. First, it will promote policies related to tobacco products and the expansion of excisable goods.
Second, the government will also intensify import duties on international trade, while utilizing export duty policies to support downstreaming of products. Finally, the government will enforce the law and crack down on the circulation of illegal excisable goods and smuggling.
