Tax Administration Modernization: Indonesia Receives IDR 8 Trillion Loan from ADB

JAKARTA. The Indonesian government will receive a loan of US$500 million, equivalent to IDR 8.06 trillion, from the Asian Development Bank (ADB). This loan is intended to support the modernization of Indonesia’s tax administration system.

According to Jiro Tominaga, ADB Director for Indonesia, as quoted by Kontan.co.id, this loan reflects ADB’s commitment to promoting digitalization and strengthening international tax cooperation.

One focus area is the Tax Administration Core System, or Coretax. The implementation of Coretax is expected to simplify administrative processes.

Moreover, Coretax is anticipated to improve service delivery, enhance the accuracy and granularity of data, and strengthen the capacity of the Directorate General of Taxes (DGT).

Multinational Corporate Tax Compliance

In addition, ADB hopes that DJP can reduce international tax avoidance, including by encouraging multinational companies to pay taxes fairly.

The goal is to increase tax compliance in Indonesia. At the same time, tax avoidance practices could be reduced. As a result, Indonesia’s fiscal capacity would be strengthened.

The loan is part of ADB’s Domestic Resource Mobilization (DRM) program for Indonesia.

It is projected that, through this program, Indonesia’s tax-to-GDP ratio could increase by 1.28 percentage points by 2030. (ASP/KEN)