DPR and Government Agree to Increase Target Tax Ratio for 2024 in Efforts to Optimize State Revenue

The House of Representatives (DPR) Passes the Financial Omnibus Law (2022)

The Dewan Perwakilan Rakyat (DPR), along with the government, has reached an agreement to raise the target tax ratio for the year 2024. The new target range is set between 9.92 percent and 10.2 percent. This decision comes as part of the effort to optimize the implementation of the Harmonization of Tax Regulations (HPP) Law, as stated by Amir Uskara, the Deputy Chairman of Commission XI of the DPR, during a meeting on State Revenue.

The government had previously proposed a tax ratio range of 9.91 percent to 10.18 percent of the Gross Domestic Product (GDP) for 2024. This proposed range is higher than the target for 2023, which was set at 9.61 percent. The aim is to enhance state revenue by exploring various avenues, including taxation, customs and excise, non-tax state revenue (PNBP), and expanding the tax base.

As part of these efforts, the government plans to optimize the tax potential derived from downstreaming programs that are currently being promoted to transform the Indonesian economy. Additionally, the government intends to maximize non-tax state revenue through the utilization of natural resources, dividends from state-owned enterprises, improved innovation and quality of services, effective management of state-owned assets, and strengthening governance and synergy.

Commission XI also expresses its support for the government’s endeavors to optimize the collection of PNBP receivables. This includes the implementation of the Automatic Blocking System (ABS) with consistent criteria to facilitate the settlement of outstanding PNBP receivables.

In terms of performance, the government achieved noteworthy results in 2022. The tax revenue recorded amounted to Rp1,716.8 trillion, surpassing the set target of Rp1,485.0 trillion, indicating a 115.6 percent achievement.

This represents a 34.3 percent increase compared to the previous year. Furthermore, Indonesia’s tax ratio in 2022 reached 10.41 percent, reflecting a positive growth from 9.12 percent in 2021 and 8.33 percent in 2020. However, it is important to note that the ideal tax ratio for a country is generally considered to be around 15 percent.

The adjustment in the target tax ratio for 2024 demonstrates the commitment of the DPR and the government to strengthen tax revenues and optimize the fiscal framework. These measures are intended to support the economic development of Indonesia and enhance the country’s financial stability in the long term.