Indonesia Targets Higher Tax-to-GDP Ratio by 2026
The Indonesian government is set to increase its tax-to-gross domestic product (GDP) ratio to 11% by 2026, as part of efforts to boost revenue and reduce the country's dependence on oil exports.
According to a report released by the state-owned investment holding company, Purbaya Karya, the government aims to achieve this target through various measures, including the implementation of a new tax system that targets large corporations and wealthy individuals.
The government has also announced plans to introduce a wealth tax, which will impose a levy on individuals with assets exceeding a certain threshold. This move is seen as an effort to address income inequality and redistribute wealth more evenly throughout society.
Experts say that achieving this target will require significant improvements in the country's tax administration, including enhanced compliance mechanisms and increased transparency. They also note that the government must balance its revenue-raising ambitions with the need to promote economic growth and attract investment.
The government's target is part of a broader effort to diversify Indonesia's economy and reduce its reliance on oil exports, which currently account for around 13% of GDP. By increasing tax revenues, the government hopes to create a more stable source of income and support long-term economic development.
However, critics argue that the government's plan may be too ambitious and does not take into account the potential impact on businesses and individuals who will be subject to the new tax regime. They also point out that the wealth tax is likely to be contentious among the wealthy classes, who may see it as an attack on their interests.
Despite these challenges, the government remains committed to its target, citing the need for increased revenue to support development projects and social welfare programs. As such, the road ahead will be marked by intense debate and negotiation over the details of the new tax system.
The Indonesian government is set to increase its tax-to-gross domestic product (GDP) ratio to 11% by 2026, as part of efforts to boost revenue and reduce the country's dependence on oil exports.
According to a report released by the state-owned investment holding company, Purbaya Karya, the government aims to achieve this target through various measures, including the implementation of a new tax system that targets large corporations and wealthy individuals.
The government has also announced plans to introduce a wealth tax, which will impose a levy on individuals with assets exceeding a certain threshold. This move is seen as an effort to address income inequality and redistribute wealth more evenly throughout society.
Experts say that achieving this target will require significant improvements in the country's tax administration, including enhanced compliance mechanisms and increased transparency. They also note that the government must balance its revenue-raising ambitions with the need to promote economic growth and attract investment.
The government's target is part of a broader effort to diversify Indonesia's economy and reduce its reliance on oil exports, which currently account for around 13% of GDP. By increasing tax revenues, the government hopes to create a more stable source of income and support long-term economic development.
However, critics argue that the government's plan may be too ambitious and does not take into account the potential impact on businesses and individuals who will be subject to the new tax regime. They also point out that the wealth tax is likely to be contentious among the wealthy classes, who may see it as an attack on their interests.
Despite these challenges, the government remains committed to its target, citing the need for increased revenue to support development projects and social welfare programs. As such, the road ahead will be marked by intense debate and negotiation over the details of the new tax system.