Arnoldus Kristianus, Jakarta – Finance Minister Sri Mulyani Indrawati said on Tuesday that Indonesia's tax revenue is unlikely to meet the target set in the 2025 state budget, citing several economic challenges.

According to the Finance Ministry's latest projections, tax revenue is expected to reach Rp 2,706.9 trillion ($166.8 billion) against the official target of Rp 2,789 trillion ($171.9 billion).

Based on our latest calculations, tax revenue will reach Rp 2,706.9 trillion, or 94.9 percent of the 2025 budget target, Sri Mulyani said during a hearing with the House of Representatives Budget Committee in Jakarta.

She explained that efforts to boost tax collection this year have faced multiple headwinds. Among them is the government's decision to cancel the planned increase in the value-added tax (VAT) from 11 percent to 12 percent.

Tax revenue from the commodities trade has also weakened, she added.

Tax collection contracts in first half of 2025

In the first half of 2025, tax revenue stood at Rp 831.26 trillion ($51.2 billion), equivalent to 38 percent of the annual target. This figure represents a 7 percent contraction compared to the same period last year.

Breakdown of first-half tax revenue includes:

Income Tax (PPh) totaled Rp 491.1 trillion, down 11.3 percent from the first half of 2024. This includes Rp 20.3 trillion from the oil and gas sector and Rp 470.9 trillion from non-oil and gas sectors.

Value-Added Tax (VAT) and Luxury Goods Sales Tax (PPnBM) reached Rp 267.27 trillion, down 19.7 percent year-on-year.

Property Tax (PBB) saw a sharp increase to Rp 11.5 trillion, jumping 247.2 percent compared to the first half of 2024.

Other Taxes recorded Rp 61.33 trillion, a staggering increase of 1,550.6 percent from the same period last year.

Sri Mulyani noted that despite some significant gains in specific tax categories, broader economic pressures – particularly in the commodity sector – are weighing on the government's ability to meet its tax targets for 2025.

Source: https://jakartaglobe.id/business/finance-minister-indonesias-tax-revenue-unlikely-to-meet-2025-targe