Indonesia's Tax Revenue Faces Decline Amid Rising Layoffs

Sharp Drop in Personal Income Tax Receipts

Indonesia's tax revenue experienced a significant decline in the first ten months of 2025, primarily due to a substantial drop in personal income tax receipts. The realization of Personal Income Tax (PPh OP) and Article 21 Income Tax (PPh 21) reached Rp 191.66 trillion by the end of October 2025, representing a 12.8% decrease compared to the same period last year ¹

Factors Contributing to Tax Revenue Decline

The decline in personal income tax is largely attributed to the widespread layoffs that occurred throughout 2025. Raden Agus Suparman, a tax consultant from Botax Consulting Indonesia, stated that the massive layoffs were the primary contributor to the 12.8% decline in PPh OP and PPh 21 receipts ¹

Overall Tax Revenue Performance

The Directorate General of Taxes (DJP) reported that the net tax revenue from January to October 2025 amounted to Rp 1,459.03 trillion. This figure represents a 3.9% contraction compared to the same period in the previous year ²

• Corporate Income Tax (PPh Badan): Rp 237.56 trillion (down 9.6%)
• Personal Income Tax (PPh OP and PPh 21): Rp 191.66 trillion (down 12.8%)
• Final Income Tax, Article 22, and Article 26: Rp 275.57 trillion (down 0.1%)
• VAT and Luxury Goods Sales Tax (PPN & PPnBM): Rp 556.61 trillion (down 10.3%)
• Other categories: Rp 197.61 trillion (up 42.3%)

Impact of Tax Refunds on Revenue

Dirjen Pajak Bimo Wijayanto explained that one of the factors contributing to the contraction in net tax revenue was the significant increase in tax refunds. The DJP reported a 36.4% surge in tax restitution to taxpayers by October 2025 ²

Economic Implications

The decline in tax revenue, particularly from personal income tax, reflects the challenging economic conditions faced by Indonesian workers. The widespread layoffs have not only affected individual incomes but also had a broader impact on the country's tax base.