INDONESIA SETS AMBITIOUS TAX REVENUE TARGET FOR 2015 By Fardah

 Jakarta, March 25, 2015 (Antara) -- The Indonesian government has set an ambitious tax revenue target of Rp1,489.3 trillion in total, including Rp1,244.7 trillion only from non-oil/gas taxes, for 2015, hoping for support from a better taxation system.

        President Joko "Jokowi" Widodo received the parliament's approval mid-February for a 2015 budget that includes considerable increases in infrastructure expenditure and tax collection. It calls for a 14 percent increase in total revenue and a 30 percent rise in tax collection.

        The government will have to rely heavily on higher non-oil/gas revenue, including from value-added tax (VAT) and corporate income tax, to finance infrastructure projects.

        In the Revised State Budget 2015 (APBN-P), the government set a target of collecting Rp1,244.7 trillion as non-oil/gas taxes, which is some 39 percent higher than the Rp895 trillion collected last year.

        With oil and gas taxes, the government has set a total tax revenue target of Rp1,489.3 trillion.

        "We are optimistic that our target is achievable," President Jokowi said recently.

        He cited the example of the e-filing system, stating that it could improve tax collection.

        The president explained that it was normal for tax revenue to be low early in the year, but by the end of the year, it would increase significantly.   
   The Indonesian government has also issued a number of policies to improve the country's economic performance and continue national economic structural reform.

        "The first policy deals with tax allowance for companies investing in Indonesia, companies creating employment opportunities, companies that are export-oriented, and companies that carry out research and development," the country's Coordinating Minister for Economic Affairs Sofyan Djalil stated during a press conference at the presidential office in Jakarta recently.

        He added that the government would also give a tax incentive to several shipyards and companies that manufacture agricultural equipment.

        "We will also issue an anti-dumping policy by imposing a temporary anti-dumping tax and a temporary security import tax on imported products that are traded unfairly through dumping to protect domestic industries," he affirmed.

        In the agrarian field, for example, the government is considering imposing a progressive tax on idle land, which is located in strategic places in Jakarta, Agrarian and Spatial Planning Minister Ferry Mursyidan Baldan said.

        "We are in the process of proposing that progressive tax be imposed on idle land located in strategic places," Baldan revealed recently.

        He further noted that the ministry will propose the imposition of the progressive tax to the Directorate General of Taxation to incorporate it into property tax.

        In addition, the government will also impose a 10 percent VAT on toll road fares, effective April 1.  
   The VAT on toll road fees will be collected as part of efforts to achieve the tax receipt target set in the APBN-P.

         The plan to impose a 10 percent VAT is provisioned in the Directorate General's Regulation Number PER-10/PJ/2015 on the procedures of VAT collection on toll road services, Wahju Tumakaka, a spokesman for the Directorate General of Taxation, stated recently.

        According to the regulation, toll road operators are also obligated to report their businesses if they have to be registered as tax payers. They would then be required to collect, transfer, and report the payable tax, he elaborated.

        Toll road operators will also be required to produce tax invoices for every toll road fare transfer. The toll road tickets will constitute a document equal to the tax invoices.

         Moreover, World Bank economist Ndiame Diop pointed out that the tax revenue target of Rp1,489.3 trillion set by the Indonesian government in the APBN-P was unlikely to be achieved.

        "This year's tax revenue target is too ambitious because the prices of commodities are on the decline. Also, revenue from the oil and gas sector has also dropped, affected by the global oil price fluctuations," he was quoted as saying by Antara in Jakarta recently.

        Speaking at a seminar titled "Indonesia Economic Quarterly: High Expectations," Diop further noted that Indonesia had not achieved its tax revenue targets in several years due to difficulties such as a slowing economy and declines in the prices of commodities worldwide.    
   The analyst explained that various efforts, including the revision of several regulations to collect potential new taxes, conducted by the Directorate General of Taxation would not have the desired effect this year as their impact would only be realized in 2016.

       This year, the decreasing prices of oil will also affect the country's revenue targets.

        "Revenue shortfall is unavoidable. In 2015, the sharp declines in oil prices could affect non-tax state revenue targets, as well. The government must work harder," he remarked.

        According to a World Bank report released at the event, this year's revenue deficit could amount to as much as Rp282 trillion.

        "Perhaps the government will have to revise its spending plan," Diop pointed out, talking about the significant impact this deficit could have.  
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