Affected by Covid-19 Pandemic, Tax Revenue in May Experienced 10.8% Contraction

Tuesday, 16 June 2020

Affected by Covid-19 Pandemic, Tax Revenue in May Experienced 10.8% Contraction

JAKARTA. The realization of tax revenue until 31 May, 2020 was recorded at only IDR 444.6 trillion or only 35.4% of the Revised 2020 State Budget (APBN-P) target, which was set at IDR 1,254.1 trillion. Compared with the same period in 2019, the realization showed a contraction of 10.8%.

According to Minister of Finance Sri Mulyani in her presentation, almost all types of taxes experienced a contraction. This is due to economic condition that is depressed by the 2019 Corona Virus Disease (Covid-19) pandemic. Government policy that implements Large Scale Social Restrictions (PSBB) have suppressed the volume of sales of goods and services in various sectors.

Read: Beware of the COVID-19 Pandemic Impact on Transfer Pricing

In addition, tax incentives issued by the government in the context of mitigating the impact of Covid-19 also contributed to reducing tax revenue in May.

Types of Taxes Growth 
Income Tax Article 21 -28,4%
Individual Income Tax 9,86%
Corporate Income Tax -34,54%
Income Tax Article 26 -22,82%
Final Income Tax -34,95%
Domestic VAT -25,41%
Income Tax/ VAT on import -45,12%

Thorough Contraction 

If viewed in more detail, only the revenue of Land and Building Tax (PBB) that is still growing positively. Other types of taxes, such as Oil and Gas Income Tax (PPh Migas), Non-Oil and Gas Income Tax (PPh nonmigas), Value Added Tax (VAT) and other taxes each experienced negative growth.

The biggest contraction occurred in oil and gas income tax revenues by 35.6% compared to the realization in May 2019. While non-oil and gas income tax experienced a 10.4% contraction, VAT contracted 8,0% and other taxes have a 6.4% contraction.

Read: Tariff Reduction of ITA 25 is Effective As of April 2020 Tax Period

Tax revenue from various business sectors have also contracted, such as processing industries that dropped 6.8%, trade industry dropped 12%, financial services and insurance industry dropped 1.6%, construction and real estate sectors dropped 11%, mining sector dropped 34.9%, transportation and warehousing sectors dropped 6.4%. 

The government considers that the condition of tax revenue until May reflects economic conditions in the second quarter of 2020, which is expected to grow negative. Nevertheless, the government is quite optimistic that the Indonesian economy will recover in the third and fourth quarters.



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