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Prabowo seeks new tax chief to achieve 16% tax ratio

Jakarta Globe - March 5, 2024

Arnoldus Kristianus, Jakarta – Presidential candidate Prabowo Subianto wants to raise the tax ratio to 16 percent, up from the current 10 percent, which he deems low compared to other countries.

"We are not going to raise taxes, but we need to expand the number of taxpayers," Prabowo, who is poised to win the 2024 Presidential Election based on preliminary results, said at the Mandiri Investment Forum in Jakarta on Tuesday.

Currently, Thailand and Malaysia have tax-to-GDP ratios above 16 percent, while Vietnam and Cambodia range between 16 percent and 18 percent.

"I think this can be done, from the current ratio of 10 percent to 16 percent. A 6 percent increase from the $1,500 billion (Rp 23,000 trillion) GDP would be a significant figure, reaching $90 billion (Rp 1,400 trillion)," Prabowo explained.

Prabowo also sought input from Minister of State-Owned Enterprises Erick Thohir and former Finance Minister Chatib Basri to identify a suitable candidate for the position of Director-General of Taxation to enhance tax ratios.

"Erick, Darmawan Junaidi (President Director of state-lender Bank Mandiri), Chatib, please provide advice on who could be suitable as the Director-General of Taxation," said Prabowo on Tuesday.

Edy Slamet Irianto, an economic advisor within Prabowo's campaign team, had previously said that Prabowo intends to transform the Tax Directorate into a distinct entity known as the National Revenue Agency.

The Finance Ministry recorded tax revenue growth of 8.9 percent in 2023, reaching Rp 1,869.2 trillion, approximately 3 percent above the government's target.

Indonesia's tax ratio in 2023 reached 10.21 percent of the GDP. Although this is a slight decrease compared to the previous year's 10.41 percent, the realization exceeds the initial target of 9.61 percent set for 2023.

Source: https://jakartaglobe.id/business/prabowo-seeks-new-tax-chief-to-achieve-16-tax-rati