Expanding the Tax Base, Government Reviews VAT Imposition on Toll Roads

JAKARTA. Efforts to increase state revenue are driving the government to expand the tax base. Indonesia’s tax ratio has long been considered suboptimal relative to the country’s development financing needs.

To address this, the government has begun identifying sectors with the potential to become new sources of revenue, including services that have not yet been fully taxed.

One sector currently under review is the imposition of Value Added Tax (VAT) on toll road services.

This plan is included in the Strategic Plan (Renstra) of the Directorate General of Taxes (DGT) for 2025–2029. The document states that the government is preparing the legal framework to support this policy.

“Providing a legal basis for the mechanism of VAT collection on the supply of toll road services,” the document reads, as quoted on Monday (April 20) from Kompas.com.

Focus on Tax Extensification

The study on VAT for toll roads is part of the government’s broader strategy to expand state revenue sources through tax extensification.

In addition to this sector, the government is also focusing on optimizing tax collection from cross-border digital transactions and implementing a carbon tax. These steps reflect efforts to align tax policy with economic developments and fiscal needs.

However, the plan to impose VAT on toll roads is still at an early stage. The government has yet to detail the tariff scheme or collection mechanism.

According to the document, the regulatory framework is targeted for completion in the medium term, around 2028. This means the policy will undergo further discussion before it can be implemented. (KEN)