Indonesia faces a projected tax revenue shortfall in 2025, prompting the government to roll out targeted reform strategies. The Ministry of Finance estimates that total tax receipts will reach only IDR 2,076.9 trillion by the end of the year, falling short of the IDR 2,189.3 trillion target set in the 2025 State Budget. Although this represents approximately 94.9% of the goal, it remains higher than the 2024 tax revenue, which stood at IDR 1,932.4 trillion.
Government Expects 2025 Tax Target Missed
The government’s mid-year fiscal report reveals that tax revenue in the first half of 2025 only reached IDR 831.3 trillion, or about 38% of the target. Based on current trends, the year-end projection stands at IDR 2,076.9 trillion, indicating a shortfall of IDR 112.4 trillion.
Three major tax categories will likely miss their individual goals. Oil and gas income tax (PPh Migas) will likely collect only IDR 54.1 trillion out of a target of IDR 62.8 trillion, achieving just 86.1%. Meanwhile, non-oil and gas income tax (PPh Non-Migas) may reach IDR 987.5 trillion compared to the target of IDR 1,146.4 trillion, or 86.2%.
In addition, value-added tax (VAT) and luxury goods sales tax (PPnBM) will likely fall short as well, with an estimated IDR 895.9 trillion collected out of IDR 945.1 trillion, or 94.8%.
New Tax Measures Respond to Indonesia Revenue Shortfall
To address the projected shortfall, the Directorate General of Taxes has started implementing administrative reforms and digital upgrades. Director General of Taxes Bimo Wijayanto emphasized the importance of recent improvements.
“Some of our quick wins have already begun working. Collection efficiency is improving, and Coretax is getting better. This is crucial to maintaining the balance between spending and revenue,” Bimo said at the House of Representatives complex in Jakarta on July 2, 2025.
Therefore, the government considers digital transformation, especially through the Coretax system, a vital step to increase compliance and streamline tax collection.
Tightening Oversight on Tax Restitution Claims
Bimo also outlined a stronger focus on supervising tax restitution claims. As export-related sectors like coal continue to increase refund requests, tax authorities now apply tighter controls to ensure that only valid claims proceed.
“We will strengthen oversight of COGS (cost of goods sold), ensuring that COGS components claimed can legitimately be recognized as input taxes. We will apply quality control and audit sampling,” he explained.
He also emphasized that the administration will enforce compliance while keeping the process fair and aligned with regulations. “We’ll manage it wisely but fairly and in accordance with the law,” Bimo stated.
Sectoral Challenges: Coal and Commodities in Focus
The volatility of commodity prices, particularly coal, creates significant risks to the country’s revenue stream. As coal export profits decline, more companies file tax restitution claims, which in turn reduce net contributions to the state.
“For the coal sector, given the high price volatility, we’ve already prepared several alternative steps. Once finalized, we’ll share them,” said Bimo. Consequently, the government continues to evaluate options to stabilize revenue from this critical sector without obstructing business growth.
Other Taxes Show Positive Performance
Despite challenges in major tax categories, other types of taxes continue to perform exceptionally well. Taxes outside the three main categories are expected to generate IDR 109.3 trillion, far exceeding the original target of IDR 7.8 trillion—a remarkable 1,402.3% achievement. Moreover, property taxes (PBB) should also surpass expectations, with estimated revenue of IDR 30.1 trillion, or 110.9% of the APBN target.
Long-Term Government Tax Strategy Ahead
Looking ahead, the Ministry of Finance plans to reinforce the country’s fiscal foundation through ongoing reforms and strategic oversight. The government tax reform strategy promotes fair business practices, accelerates digital integration, and targets sector-specific risks with tailored solutions.
As 2025 progresses, Indonesia continues to balance revenue challenges with innovation-driven reforms. By improving tax compliance and refining policy oversight, the government strengthens its fiscal position amid ongoing economic uncertainty.
Source: kontan.co.id, ikpi.or.id
Images: Canva Images
