Early 2025 Tax Ratio Drops to 8.42%, Making 11% Target Harder to Reach
Indonesia’s tax ratio fell to 8.42% in the first half of 2025, down from 9.49% in the same period last year. This decline puts additional pressure on the government’s goal of achieving an 11% tax ratio, making the target increasingly difficult to reach in the near term.
This drop in the tax ratio comes despite stronger economic growth. According to Statistics Indonesia (BPS), the country’s economy grew 5.12% in Q2 2025, slightly higher than the 5.05% growth recorded in the same quarter of 2024.
According to Yon Arsal, Expert Staff for Tax Compliance at the Ministry of Finance, this situation is not unusual. “Not all of our tax revenues are directly correlated with GDP at a given point in time,” Yon explained during a discussion at the Celios Office in Jakarta on Wednesday (13/8/2025), as quoted by bisnis.com.
He noted that current corporate tax installment payments reflect business performance from the previous year. In other words, if companies performed well last year, it would be reflected in higher corporate income tax revenue this year.
“Now, if their performance is weak this year, that will be reflected in next year’s revenue. Of course, businesses also undergo various dynamics,” he added.
Key Drivers of the Tax Ratio Decline
Meanwhile, Fajry Akbar, Head of Research at the Center for Indonesia Taxation Analysis (CITA), stated that the decline in Indonesia’s tax ratio in the first half of this year is not surprising. He explained that the drop was largely driven by non-economic factors, such as an increase in tax refunds (restitusi), adjustments to the average effective personal income tax rate (TER PPh 21), and technical issues related to the implementation of Coretax.
“This situation is similar to last year, although the impact is smaller this time, despite the technical problems with Coretax,” Fajry told Bisnis on Wednesday (13/7).
Data from the Ministry of Finance shows that tax revenue in the first half of 2025 reached IDR 978.3 trillion, equivalent to 39.3% of the state budget (APBN) target, lower than the IDR 1,028.04 trillion or 44.51% collected in the same period last year.
Fajry expects tax performance to improve in the second half of the year as the impact of non-economic factors subsides. CITA projects that this year’s tax revenue could reach 94% of the target, in line with the Ministry of Finance’s estimate of IDR 2,076.9 trillion, or 94.9% of the APBN target. “This means tax revenue will still grow positively this year,” he added.
However, he believes that the 11% tax ratio target set by Director General of Taxes Bimo Wijayanto remains difficult to achieve, even next year. A 10% ratio, as projected by Minister of Finance Sri Mulyani, is considered more realistic. (KEN)
