President Prabowo Sets Tax Ratio Target in the 2025-2029 RPJMN
JAKARTA. President Prabowo Subianto has issued the National Medium-Term Development Plan (RPJMN) for 2025-2029 through Presidential Regulation (Perpres) No. 12 of 2025.
In the document, President Prabowo sets a target for the tax revenue-to-GDP ratio at a level between 11.52% and 15%.
According to the government, increasing the tax ratio is necessary to support the development targets set by the administration. The government aims for Indonesia's average economic growth rate to reach 5.7%-6% during the 2025-2029 period.
To achieve this level of growth, the government requires investments ranging from IDR 35,212.4 trillion to IDR 35,455.6 trillion. Of this total, the government is expected to contribute 8.4%-10.1%, while the rest will come from state-owned enterprises (8.5%-8.8%) and the private sector, including individuals and businesses.
"In terms of the government's capacity, state revenue from tax collection (tax ratio) remains below 11%," the government stated in the RPJMN 2025-2029 document.
Indonesia’s Tax Ratio Among the Lowest
The document also reveals that Indonesia's tax ratio is among the lowest in the world.
For context, in 2023, Indonesia's tax ratio was recorded at only 10.3%, significantly lower than countries like the UK (27.3%), Mexico (14.3%), Brazil (14.2%), and Canada (14.0%).
Similarly, when compared to neighboring countries, Indonesia's tax ratio remains at a relatively low level.
Read: Bappenas: Indonesia's Tax Ratio is the Lowest in Southeast Asia
Efforts to Achieve the Tax Ratio Target
To reach the targeted tax ratio, the government will implement several policies. First, a comprehensive modernization of the Core Tax Administration System. Second, more progressive tax reforms. Third, stricter law enforcement to improve taxpayer compliance. Fourth, simplification of business processes and institutional governance reforms.
Fifth, intensification of tax policies and expansion of excise objects. Sixth, gradual increases in tobacco excise rates. Seventh, simplification of the tobacco excise rate structure. Eighth, improvement in tobacco excise governance to enhance public health and state revenue. Ninth, more targeted tax incentives based on priority sectors and regions. (ASP/KEN)
