Page 8 - Indonesia Taxation Quarterly Report (Q3-2019)

INDONESIA TAXATION QUARTERLY REPORT Q3-2019 Executive Summary

Executive Summary

Recent Developments revenue realization from tax sector
will ideally be in the range of 86.30% to
88.65% of this year’s target of IDR1,577
In this third quarter of 2019, Indonesia
achieved economic growth of 5.02% (yoy trillion. However, in the worst possible
2018 – 2019), which shows a downfall scenario, tax revenue realization could
compared to the growth in the same only reach as low as 83.58% from the
quarter last year (5.17%). In the context target.
of regional, the growths in Asia and Asia
Pacific were re-projected by IMF and the In terms of custom and excise, revenue
World Bank resulting at a slower pace realization against its target from
import duty is the highest compared to
amid weakening global demand and the performance of other components
heightened trade policy uncertainty. In in spite of its negative growth. The
general, this may cause the national contraction of import duty revenue for
growth target of 5.3% by the end of the this quarter was strongly influenced by
year seems getting harder to accomplish. the performance of national imports,
which reached -9.12% until the end of
In fiscal context, as of the end of September 2019.
September, the realization of state
revenue from the tax sector contributed In midst of an unfavorable economic
as much as 57.21% of the 2019 State situation, Government of Indonesia
Budget target with revenue of IDR902.59 is currently drafting a new law that is
trillion. Cumulated monthly, the tax commonly called as omnibus law, namely
the provisions and facilities related to
revenue recorded in September 2019 taxation to strengthen the economy.
experienced only 0.19% annual growth. This draft will be one of the priorities to
This nominal is then considered as very complete by new Director of DGT who is
low compared to last year where its officially appointed on 1 November 2019,
growth for cumulative revenue of the Suryo Utomo.
end of third quarter reached 16.87% (yoy
2017-2018). Despite the stagnancy on ease of doing
business, Indonesia notches score of
Viewed in more detail based on the 75.8 for Paying Taxes category in Doing
revenue for each type of tax, the three Business (DB) 2020, improving from 68.4
biggest proportion in the period of in DB 2019. This recent score is above
January to September 2019 were the average score of Paying Taxes in
Asia Pacific region for DB 2020, 73.60.
Domestic VAT (22.11%), Corporate However, Indonesia’s tax ratio was
Income Tax Article 25/29 (19.09%), and claimed as the lowest in Asia Pacific
VAT on Import (16.03%). However, the region in 2017 according to OECD Report
revenue performance of these three that was published in the end of July.
types of tax which become the revenue
backbone of the 2019 State Revenue At global level, addressing tax challenges
were slowing down at the end of third from digitalization of the economy is still
quarter 2019. In this Report, DDTC Fiscal a rising concern among countries. OECD
Research also conducted the revenue itself as one of the initiators of global
forecasting, which estimates that the tax cooperation is still in the progress

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