Through the implementation of National Economic Recovery/Pemulihan Ekonomi Nasional (PEN) program, government predicts that economic recovery conditions in 2023 will strengthen and tax revenues will continue to increase. According to the Fiscal Policy Agency Press Release Number SP-38/BKF/2022, government and The House of Representatives of the Republic of Indonesia have set the highest tax revenue target in history for 2023, amounted to Rp2,021.2 trillion. The target consists of Rp1,718,0 trillion tax revenues and Rp303,2 trillion customs and excise.
Several fiscal policies are formulated to achieve 6.7% tax revenue growth target. In general, policies are set with a focus on increasing community productivity. The growth in tax revenues was supported by, among other things, an increase in the contribution of VAT in line with new VAT rate policy implementation and the prospect of domestic demand that continues to grow.
Furthermore, the contribution of each type of tax is expected to remain unchanged. Income Tax is expected to contribute 54.5% of tax revenue, lower than 2022 target of 55.7%. This is due to the lower base of oil prices, as well as consideration of the sustainability of the economic recovery and unsustainable 2022 revenues. Value Added Tax (VAT) is expected to contribute 43.2% of tax revenue, an increase of 0.9% from the previous year. This is due to domestic consumption growth, new VAT rates implementation and income from energy compensation. Land and Building Tax and other taxes are expected to contribute 2.3% of tax revenues, primarily due to an increase in Land and Building tax objects (plantation, forestry, mining and other sectors).In this regard, the government explained in the Macroeconomic Framework and Principles of Fiscal Policy 2023 document that there are 3 (three) general tax policies that will be applied in 2023, namely:
- Broadening tax base and increasing tax ratio through tax extensification and potential exploration, tax on the digital economy optimization as well as monitoring Voluntary Disclosure Program (VDP) implementation;
- Strengthening administration, increasing compliance and improving regulations; and
- Providing targeted and measurable tax incentives by maintaining the effectiveness and direction of strategic economic activities that produce a large multiplier effect.
- Optimization of tax base broadening through Taxpayer supervision as a follow-up to VDP and implementation of ID Number as TIN;
- Strengthening regional-based tax extensification and supervision in order to reach all potentials in each region;
- A more focused supervision through preparation of the Monitoring Priority List implementation;
- Prioritization of supervision over High Wealth Individual Taxpayer along with Group Taxpayer and the digital economy;
- Acceleration of human resources, organization, business processes and regulations reformation in accordance with preparation for core tax system implementation (accelerated expansion of functional positions, changes and improvements to the duties, as well as functions of central office and regional office units);
- Expansion of tax payment channels to facilitate taxpayers in carrying out their tax rights and obligations;
- Fair law enforcement through optimizing wrongdoing disclosure and the use of digital forensic, and
- Providing targeted and measurable tax incentives in order to encourage the growth of certain sectors and provide investment convenience.
