The Threat of Recession, Digital Tax to Become The Backbone of Revenue in 2023

Tuesday, 15 November 2022

The Threat of Recession, Digital Tax to Become The Backbone of Revenue in 2023

JAKARTA. Taxes from digital transactions will be the backbone of the Directorate General of Taxes (DGT) in supporting state revenues if the global recession impacts the Indonesian economy.

Quoting, Indonesia, and the whole world are facing the threat of a recession which is predicted to occur in 20223.

Several types of revenue will be affected by the recession that hit the global economy and then impacted the Indonesian economy.

The biggest impact will occur on export or import tax revenues. Because the recession will affect Indonesia's international trade.

Not only that, but tax revenues from sectors related to export-import activities will also be depressed.

Moreover, a recession may result in a decline in tax revenue such as VAT. This is because VAT has a very strong correlation with economic conditions.

Under this condition, DGT assesses that digitalization of the economy will be a source of state revenue that must be optimized. The challenge is, the tax authority must be ready to make changes so that the potential for digital taxes can have a positive impact on revenue.

For the record, until the end of September 2022, the realization of value-added tax (VAT) and Sales Tax on Luxury Goods (STLG) revenues was recorded at IDR 504.45 trillion or 78.94% of the target.

Meanwhile, VAT revenue from trade through the electronic system (PMSE VAT) has reached IDR 9.17 trillion as of October 2022.




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