The Finance Ministry of Indonesia will study whether the price of a package of cigarettes can be raised to IDR 50,000 (approx. USD $3.8), almost twice as high as the current average price of a package of cigarettes in Indonesia. The price hike would help the government to reduce a looming tax shortfall and discourage people from consuming their death sticks. The Tobacco Atlas estimates that there are 53.7 million active adult smokers and 2.6 million active youth smokers in Indonesia. Hence, Indonesia is the third-largest cigarette consumer (after China and Russia).

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Indonesia has finally become more realistic in terms of setting its tax revenue target. In the 2017 State Budget draft proposal that was sent for approval by the central government to Indonesia's House of Representatives (DPR) earlier this week, it set the 2017 tax revenue target at IDR 1,271.7 trillion (approx. USD $97.1 billion), down 3.6 percent from the target of IDR 1,318.9 trillion worth of tax revenue in the 2016 budget. A more realistic tax revenue target will enhance Indonesia's fiscal credibility.

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The government of Indonesia selected two islands - Resort islands Bintan and Rempang, situated near Singapore - as the possible location for its tax haven (a low-tax jurisdiction that should prevent Indonesian taxpayers from moving their assets to other countries in search of more attractive tax rates, while non-residents will also be able to establish so-called shell companies). Currently, a significant portion of Indonesian funds flow to offshore financial centers in Singapore, Mauritius, British Virgin Islands and Panama.

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Indonesia is still planning to revise the nation's tax tariff system, specifically corporate income tax and value-added tax (VAT). Indonesia's corporate income tax rate could be cut to 17 percent, from 25 percent currently. The plans were confirmed this week by Indonesian President Joko Widodo as well as Indonesian Finance Minister Sri Mulyani Indrawati. Lowering Indonesia's corporate income tax to 17 percent - matching Singapore's tariff - would make it more attractive for investors to move, or keep, their business in Indonesia.

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Although the peak of repatriated fund flows and tax declarations - in the context of Indonesia's tax amnesty program - are expected to occur in the months September and October 2016, there is room for concern whether the ambitious targets of the government can be achieved. Between the launch of the program on 18 July and 1 August 2016 the government only saw IDR 98.43 billion (approx. USD $7.6 million) of additional income from 464 tax payers, while it targets to collect a total of IDR 165 trillion (approx. USD $12.7 billion) within a nine-month period.

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Before the end of 2016 the Indonesian government plans to have imposed a controversial excise on plastic packaging. Earlier this year the government had already suggested a IDR 200 (approx. USD $0.02) excise duty for food and beverage products wrapped in plastic packages. However, with all spotlights focused on Indonesia's tax amnesty program this plastic wrapping excise tax has been off analysts' radar. Lets take a closer look at this excise: what is it and why does the government of Southeast Asia's largest economy want to implement it?

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Singaporean authorities deny that the nation's banks offer incentives to Indonesian clients to keep their assets stashed in Singapore. Last week, reports started to circulate in local Indonesian media claiming that Singaporean banks offer to finance the difference between interest paid on the declaration of assets kept in Singapore and the interest paid on the assets repatriated to Indonesia. Indonesia is eager to see the repatriation of offshore funds (stashed in so-called tax havens) through the tax amnesty program. It is estimated that some USD $200 billion worth of Indonesian funds are kept in Singapore.

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According to an Indonesian tax official, 149 taxpayers have already filed for Indonesia's tax amnesty program (which was launched on Monday 18 July 2016) at North Jakarta's Tax Office. Eleven have already settled their tax debt. However, spokesperson for the Directorate General of Taxation, Hestu Yoga Saksama, provided no information about the amount of tax revenue or repatriated funds that are involved. Saksama is optimistic that the government's target of seeing the repatriation of IDR 1,000 trillion (approx. USD $76 billion) worth of previously undeclared offshore assets into Indonesia will be achieved.

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Indonesia plans to introduce a special tax regulation for those small and medium-sized enterprises that generate revenue and profit through online retail sales (e-commerce business). Daniel Tumiwa, Chairman of the Indonesian E-commerce Association (idEA), informed reporters about the government's plan. He added that only a small tax tariff will be charged on small and medium-sized e-commerce companies. The new regulation is expected to be implemented later this year.

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The Indonesian rupiah has been rallying impressively over the past couple of days in the "post-Brexit" era. Amid severe uncertainty ahead of the Brexit referendum result, Indonesia's currency depreciated markedly on Thursday 23 June 2016. However, in the following days the rupiah started to strengthen, touching a two-month high against the US dollar (even though the US dollar has been strong as well due to the Brexit issue). Based on the Bloomberg Dollar Index the rupiah is now trading at IDR 13,175 per US dollar. What explains this recent rupiah strength?

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Freeport Indonesia stated that the company's production of copper concentrate plunged since the Indonesian government implemented the ban on exports of unprocessed minerals on 12 January 2014. Currently, Freeport only produces to supply Smelting Gresik, Indonesia's first copper smelter and refinery. As such, Freeport only operates at 45 percent of production capacity regarding copper concentrate. According to Freeport Indonesia's spokeswoman Daisy Primayanti, production of copper concentrate fell to 3,150 tons per day.

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Coal is one of the most important commodities for Indonesia in terms of state revenue as it accounts for about 85 percent of the country's total mining revenue. Therefore, when global coal prices fell sharply from 2011 (amid a slowing global economy), Indonesia felt the impact. In a response to lower coal prices, Indonesian miners actually increased coal output thus placing more downward pressure on coal prices and profit margins. Although the coal industry will remain frail for some time to come, long-term prospects are still strong.

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Indonesia's Ministry of Energy and Mineral Resources plans to set royalties for all types of coal at 13.5 percent (of net sales) as part of a revision of Government Regulation No. 9 - 2012 on Tariff and Types of Non-Tax Revenue. Currently, the percentage of royalty depends on the quality of the coal that is extracted as well as the type of permit that is issued to the coal miner. Apart from higher coal royalties, the Indonesian government also proposes a windfall profits tax in case there is a sharp upward price correction.

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Indonesia's Finance Minister Chatib Basri stated that the government of Indonesia is busy preparing three new policies that aim to restore financial stability as well as attract foreign direct investments. These three new policies involve the higher sales tax on imported luxury cars, a revision of Indonesia's negative investment list, and the higher income tax on imported consumption goods. These three new policies are in addition to the policy package that was introduced by the Indonesian government in August 2013.

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Apart from the five tax incentives that I have mentioned in a previous column, the Indonesian government also intends to ease two other tax rules in order to boost investments in Indonesia from 2014 onwards. These are the tax holiday and tax allowance. Relaxation of the tax holiday involves an alteration to the period as well as the size of the investment, and relaxation of procedural difficulties. Relaxation of the tax allowance involves the revision of the number of sectors that are eligible and a relaxation of procedures in the form of tax clearance.

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The government of Indonesia is busy preparing seven tax incentives to boost investment flows in 2014. Investments currently account for approximately 32 percent of the country's gross domestic product (GDP). Only domestic consumption owns a larger stake towards the economy with 55 percent. The regulatory framework related to the seven incentives is expected to be finalized by the end of this year. The incentives consist of five new ones and the relaxation of two older incentives, namely the tax holiday and tax allowance.

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Data released by a department of Indonesia's Ministry of Finance showed that the country's budget deficit amounted to IDR 25.9 trillion (USD $2.64 billion) on 31 May 2013. This figure is equivalent to 16.9 percent of the target that is set in the 2013 State Budget (IDR 153.3 trillion). The IDR 25.9 trillion deficit translates to 0.27 percent of Indonesia's gross domestic product (GDP). The maximum amount of deficit - as stipulated by the State Budget Law of 2013 - that is allowed to be maintained is equivalent to 1.65 percent of GDP.

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In the revised state budget, Indonesia's government has lowered its forecast for tax revenue in 2013. Originally, the government expected to receive IDR 1,193.0 trillion (USD $122.4 billion) but the figure has been tuned down to IDR 1,139.3 trillion (USD $116.9 billion). Minister of Finance Chatib Basri stated that the forecast for tax revenue has been revised down by IDR 55.1 trillion, while the figure for export duties has been raised by IDR 1.4 trillion. Indonesia's tax-to-GDP ratio in 2013 has been changed to 12.11 percent from 12.87 percent.

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The Indonesian government - through its Energy and Mineral Resources Ministry - has stated to provide fiscal incentives to encourage oil and gas exploration in Indonesia. Indonesia, a former OPEC member, has recorded a declining oil production since the 1990s due to a lack of exploration and investments in this sector. To reverse this situation, the government will provide a number of tax exemptions.

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