Tax revenue collection is showing good growth in Indonesia so far in 2018. However, due to the ambitious target set by the central government chances of another tax shortfall remain highly probable at the end of the year. Based on data from Indonesia's Finance Ministry, non-oil & gas tax revenue realization grew 19.1 percent year-on-year (y/y) to IDR 156.8 trillion (approx. USD $11.4 billion) between 1 January and 7 March 2018, from IDR 131.7 trillion in the same period one year earlier.
This strong performance is underpinned by a 20.3 percent (y/y) increase in non-oil & gas income tax to IDR 88.7 trillion (approx. USD $6.5 billion) and a 18.4 percent (y/y) increase in value-added tax (VAT) to IDR 67 trillion (approx. USD $4.9 billion) over the aforementioned period.
Yon Arsal, Director of Tax Revenue and Compliance at the Directorate General of Taxes, said improving tax realization is the direct result of people's growing tax compliance after the ending of Indonesia's successful tax amnesty program, a program that ran between July 2016 and 31 March 2017.
Despite the strong non-oil & gas tax growth rate (19.1 percent y/y), it will not be enough to meet the central government target that was set on the 2018 State Budget. The government targets for a 26 percent rise in non-oil & gas tax revenue realization in full-year 2018. Therefore, Yustinus Prastowo, Executive Director of the Center for Indonesian Taxation Analysis, expects only 87 percent of the tax revenue target (IDR 1,424 trillion) can be achieved this year.