Manufacturing and Trade Sector Depressed, Tax Revenue in the First Quarter Down 5.6%

JAKARTA. The government announced the realization of tax revenue in the first quarter of 2021 amounting to IDR 228.1 trillion or down 5.6% compared to the same period in 2020. The decline was driven by economic activity that has not fully recovered yet, especially in several important sectors such as manufacturing and trade.

Tax revenue from the manufacturing sector contracted by 7.22%, while the trade sector, which is closely related to public consumption, fell 5.51%.

The government considers the low tax revenue of the manufacturing sector due to transactions that occurred in the last year, but not repeated this year.

Selain itu, pemberian insentif pajak juga turut memperdalam penurunan. In addition, the provision of tax incentives also deepened the decline.

Read: 2021, Hopes and Worries for Indonesian Taxes

Some other sectors that are also contracted include financial and insurance services, construction and real estate, transportation, and warehousing as well as corporate services industry.

Tax revenue from the financial services and insurance industries contracted by 14.64% due to Bank Indonesia's policy of lowering the benchmark interest rate and slowing bank lending.

Meanwhile, the decrease occurred in several types of taxes, especially Corporate Income Tax (PPh) which contracted by 40.48%, Income Tax Article (ITA) 21 grew minus 5.58% and ITA 22 on Import decreased 38.55%.

Several other types of taxes experienced positive growth, such as Individual Income Tax grew by 99.31%, ITA 26 1.56%, Final Income Tax 0.6%, Domestic Value Added Tax (VAT) 4.11%, and VAT  Imports grew 8.21%.

The negative performance of corporate income tax or corporate tax was due to the economic slowdown and the provision of incentives in the form of reduced installments of ITA 25 and reduction in corporate income tax rates from 25% to 22%.