Tax Target for 2026 Increased, All Sectors Urged to Contribute
The government and the House of Representatives (DPR) have officially agreed on a higher tax revenue target for 2026. This agreement was reached as part of the initial discussion of the 2026 Draft State Budget (RAPBN) during a plenary session of the House of Representatives on Thursday (July 24, 2025).
The agreed target is higher than the initial proposal. In the 2026 Macroeconomic Framework and Fiscal Policy Guidelines (KEM-PPKF), the government initially set a tax revenue target of 10.08%–10.45% of gross domestic product (GDP). However, after discussions with the House's Budget Committee (Banggar), the target was raised to 10.08%–10.54%.
"The government will take various measures, policy efforts, and programs to increase state revenue to reach a range of 11.71% to 12.31% of GDP," said Deputy Chair of the Budget Committee, Jazilul Fawaid, during his speech at the plenary session as quoted from bisnis.com.
Jazilul also outlined four key tax policy directions for the coming year, including broadening the tax base through intensification and extensification, technology-based tax supervision, harmonization with international policies, and more targeted incentives to encourage investment and industrial downstreaming.
All Sectors Contribute
Meanwhile, the Ministry of Finance stated that the increase in the tax target is in line with the spirit of tax reform. “It is part of revenue reform,” said Febrio Nathan Kacaribu, Director General of Economic and Fiscal Policy at the Ministry of Finance, after the plenary session.
According to him, the government wants all business sectors to contribute to strengthening national tax revenue. “Historically, dominant sectors such as manufacturing have contributed significantly. But we want to see broader contributions,” he said.
However, despite the optimism, the 2025 tax performance has been less than encouraging so far. Minister of Finance Sri Mulyani Indrawati previously projected that this year’s tax revenue would fall short of the target. In a working meeting with the House of Representatives, she stated that revenue would only reach IDR 2,076.9 trillion, or about 94.9% of the 2025 State Budget target.
“If we look at tax revenue, it will reach IDR 2,076.9 trillion, or 94.9% of the State Budget target,” said Sri Mulyani. This implies a potential shortfall of around IDR 112.4 trillion.
She explained two main reasons for the underperformance. First, the planned VAT rate hike from 11% to 12% this year was canceled. Second, global commodity prices have declined, affecting key sectors that contribute to taxes. (KEN)
