Indonesia's Tax Revenue Faces Challenges as Economic Growth Slows

Current Tax Collection Status

Indonesia's tax revenue has hit a significant roadblock, reaching only Rp 1.459 trillion by October 2025. This figure represents 70.2% of the annual target set at Rp 2.0769 trillion. Finance Minister Purbaya Yudhi Sadewa addressed the issue during a parliamentary hearing, explaining that the current economic conditions have directly impacted tax collection.

Economic Factors Affecting Tax Revenue

The minister attributed the tax revenue shortfall to the slowing economic growth experienced earlier in the year. Many businesses faced significant challenges, resulting in financial losses that naturally led to reduced tax payments. Purbaya emphasized that taxing businesses during economic hardship could exacerbate their struggles. He highlighted the need for a balanced approach to tax collection that doesn't hinder economic recovery.

Government's Approach to Tax Collection

While acknowledging that tax collection is currently below target, Purbaya assured that the government would continue to push for better performance until the end of the year. However, he was cautious about avoiding excessive pressure on taxpayers, particularly businesses, as this could negatively impact economic growth momentum. The government is walking a fine line between meeting tax revenue targets and supporting economic stability.

Implications for Indonesia's Economy

The current tax revenue situation reflects broader economic challenges. With many businesses struggling, the government faces the dual task of maintaining revenue while supporting economic growth. This scenario underscores the need for careful fiscal management and potentially exploring alternative revenue streams or support measures for businesses.