Page 8 - Indonesia Taxation Quarterly Report (Q2-2020)

INDONESIA TAXATION QUARTERLY REPORT Q2-2020

Executive Summary

Survey of Recent Growth of tax revenues experienced
Developments a significant contraction mainly in
May 2020. This pressure was caused
by the economic activities’ downturn
Currently, the uncertainty remains as a side effect of social restrictions
high as the ongoing domino effect of imposed during the pandemic, as well
Covid-19 pandemic has been inevitably
widespread. This is evidenced by the as the utilization of various tax incentive
development of health-related root facilities granted by the government in
causes to social, economic, and financial order to maintain economic stability.
problems throughout the world. The
direction of the world economy has Overall, the growth of tax revenue
changed dramatically, and this leads to a components until the end of June
recession with unknown timeframe. 2020 remained suppressed due to
the economic and international trade
Two international institutions, IMF and activities downturn as a result of the
OECD, project that Indonesia’s 2020 Covid-19 pandemic, as well as the
utilization of fiscal incentives in the
economy will be contracted by -0.30% context of economic recovery. However,
and -2.80% respectively. In contrast, the in terms of customs and excise, the
World Bank projects that Indonesia’s revenue performance in the second
2020 economy will remain stagnant with quarter in 2020 was far higher than the
the growth of 0.00% while the Ministry average revenues within the last 5 years.
of Finance also projects that Indonesia’s
growth will be in range between 0.00% Meanwhile, non-tax state revenues
and 0.50% for the third quarter and (Penerimaan Negara Bukan Pajak/PNBP)
around 3.00% for the fourth quarter. add up to IDR 203.94 trillion. In terms
Conversely, within the last few years of PNBP sources, oil and gas natural
Indonesia’s economic growth has always resource revenues contributed 78.89%
been positive and in the range of 5%. of revenues but experienced negative
growth of -24.58% (yoy) by the end of
second quarter this year. Similarly, non-
In terms of revenue performance, by the oil and gas natural resources revenues
end of June 2020, Indonesia’s taxation also experienced the same issue with
revenues had reached IDR 811.18 trillion the annual growth of -20.69% in same
and contributed 57.76% to the APBNP period. The negative growth was due to
target set in Presidential Reg. No. 72 of the substantial contraction in the mining
2020 whereas Indonesia’s tax revenues and forestry sectors.
stood at IDR 531.71 trillion or 44.35% of
the APBNP-Presidential Reg. No. 72 of Responding the continuing effect of
2020 target. Further, customs and excise Covid-19, the government has followed
revenues until the end of the second up a number of adjustments of taxation
quarter in 2020 have reached 93.21 or business process and expansion of
31.69% of the APBNP-Presidential Reg. fiscal facilities. For instance, the Director
No. 72 of 2020. General of Taxes has implemented on-
field operational guidelines regarding the
granting of tax incentives for taxpayers

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