Boosting Tax Ratio, Indonesia Turns to IMF for Support

Saturday, 11 May 2024

Boosting Tax Ratio, Indonesia Turns to IMF for Support

JAKARTA. The government has requested assistance from a global financial institution, the International Monetary Fund (IMF), in increasing Indonesia's tax ratio. 

This was conveyed by Director General of Treasury of the Ministry of Finance Astera Primanto Bhakti, during the Conclusion Meeting - IMF Technical Assistance Mission at the Ministry of Finance Headquarters, Jakarta, Tuesday (07/05). 

According to Astera, as quoted from the official website of the Directorate General of Treasury, increasing the tax ratio is a strategic matter for Indonesia since it is related to the government's ability to finance its spending. 

In addition to assistance in increasing the tax ratio, which is the ratio of tax revenue by the central government to the Gross Domestic Product figure, Indonesia also requested IMF assistance to encourage economic development in various regions in Indonesia. 

This is because regional economic conditions are considered to have an impact on state revenues both at the central level and at the blood level. In detail, the meeting also discussed strategies for providing effective tax incentives. 

The IMF on this occasion also provided several recommendations to the government. Among them, suggesting the government to evaluate the collection of Value Added Tax (VAT) and redesign policies related to Income Tax. 

Regarding income tax, the IMF asked the government to evaluate incentive schemes and tariffs applicable to corporate taxpayers. In addition, the IMF also advised the Indonesian government to further analyze the local tax scheme and the financial balance system. 

For this reason, the Indonesian government and the IMF plan to establish a cooperation fund to evaluate and implement VAT collection, reorganize regional schemes and financial balance. (ASP/KEN) 


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