Government Projects 2025 Tax Expenditure to Rise 11.4%

JAKARTA. The government estimates that the value of tax expenditure in 2025 will reach IDR 445.5 trillion, an increase of 11.4% from the 2024 tax expenditure projection of IDR 399.9 trillion.

The government's allocation of tax expenditures has steadily grown over time.

In the Financial Note on 2025 State Budget Bill document, tax expenditure policies will be designed in a measured manner to anticipate uncertainties and economic challenges both domestically and globally.

Allocation per Tax Type

In detail, the 2025 tax expenditure projection is dominated by Value Added Tax and Sales Tax on Luxury Goods (VAT and STLG), which amounted to IDR 265.6 trillion. 

Then the second largest tax expenditure is for Income Tax, which is pegged at 144.7 trillion. Further, import and excise duties amounted to IDR 34 trillion, land and building tax (L&B tax) in the P5 sector IDR 0.7 trillion and stamp duty IDR 0.4 trillion.

Prioritizing Public Welfare

Viewed based on the purposes, the 2025 tax expenditure allocation of IDR 209.5 trillion represents the largest portion, dedicated to enhancing public welfare.

The second largest allocation of tax expenditure is to develop Micro, Small, and Medium Enterprises (MSMEs), amounting to IDR 98.6 trillion. This includes the 0.5% final income tax facility for MSMEs.

Meanwhile, the allocation of tax expenditure to improve the investment climate is only IDR 85.2 trillion. Furthermore, the rest is intended to support the business world of IDR 52.2 trillion.

Manufacturing Receives the Largest Share

By sector, the largest tax expenditure allocation is given to the processing or manufacturing industry, amounting to IDR 122.3 trillion. 

For the second largest tax expenditure allocation is for the agriculture, forestry and fisheries sectors at IDR 56.5 trillion and the financial services and insurance sector at IDR 54.1 trillion. (ASP/KEN)