Indonesia's Tax Compliance Gap Highlights Significant Revenue Loss

Understanding the Compliance Gap

The Directorate General of Taxes (DJP) under Indonesia's Ministry of Finance has revealed a substantial tax compliance gap amounting to Rp548 trillion, equivalent to 3.7% of the country's GDP during the period from 2016 to 2021. This critical information, sourced from World Bank data, was disclosed by DJP Director General Bimo Wijayanto during a hearing with Commission XI of the Indonesian House of Representatives (DPR RI) on November 26, 2025.

Implications of the Compliance Gap

The compliance gap represents the difference between the theoretical tax revenue and actual collections, primarily due to tax non-compliance, avoidance, and evasion. Bimo Wijayanto emphasized that this figure is higher than the policy gap, which stands at Rp396 trillion or 2.7% of GDP, resulting from tax incentives and exemptions. The significant compliance gap underscores the challenges faced by tax authorities in ensuring adherence to tax regulations.

Addressing Tax Non-Compliance

The revelation of such a substantial compliance gap necessitates a comprehensive review of Indonesia's tax administration and enforcement strategies. It highlights the need for more effective measures to combat tax evasion and avoidance, potentially through enhanced tax audits, stricter enforcement of tax laws, and the implementation of more robust tax compliance programs.

Economic Impact

The loss of Rp548 trillion in potential tax revenue has significant implications for Indonesia's fiscal policy and public spending. Bridging this gap could enable the government to allocate additional resources to vital sectors such as healthcare, education, and infrastructure, thereby supporting economic growth and development.