Indonesia Aims to Boost Tax Ratio Above 10% by End-2025

Economic Slowdown Affects Tax Revenue

Finance Minister Purbaya Yudhi Sadewa expressed confidence that Indonesia's tax ratio will improve to above 10% by the end of 2025. The tax ratio, which measures tax revenue against GDP, dropped to 10.08% in 2024 from 10.31% in the previous year. This decline was attributed to the slowdown in economic activity, particularly affecting the private sector's ability to pay taxes.

Government Stimulus Measures

To address this challenge, the government has introduced several economic stimulus packages and made strategic fund placements in banks to revitalize economic growth. These measures are expected to gradually enhance the tax ratio as economic activity picks up. Purbaya emphasized that the economic slowdown in the third quarter was a key factor behind the declining tax ratio, particularly impacting the private sector.

Path to Recovery

The government's proactive approach includes various fiscal measures designed to stimulate economic recovery. By boosting economic activity, the authorities aim to increase tax revenues and improve the overall tax ratio. The success of these initiatives will be crucial in determining whether Indonesia can achieve its tax ratio target by end-2025.