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Indonesia's Tax Chief Resigns Amid Revenue Shortfall

by Mary Swire, Tax-News.com, Hong kong

04 December 2015


The head of Indonesia's national tax authority has resigned and the agency is expected to announced that it has missed tax revenue targets by a significant margin this year.

A brief statement issued by the Ministry of Finance offered no explanation for the resignation of Sigit Priadi Pramudito, who was Director General of the Indonesian Tax Office until December 2. However, commentators have linked his departure to reports that the Government had managed to collect only 65 percent of the 2015 revenue target by the end of November.

In the revised 2015 state budget, the Government set itself the goal of collecting just under IDR1,300 trillion (USD94bn) in tax revenue this year, primarily by lifting Indonesia's tax-to-gross domestic product ratio. This was an ambitious target, representing a 30 percent increase on the previous year's revenue take.

One consequence of the likely revenue shortfall is that the Government's predicted budget deficit of two percent of GDP this year will in reality be much higher. The Government may now have to find additional revenue to help plug the gap. It has already sanctioned a tax amnesty scheme, which will commence in 2016. However, taxes may also have to be increased to boost revenue performance.

It also remains to be seen whether the tax shortfall will jeopardize a proposed corporate tax cut, which is expected to happen in 2016 or 2017.

TAGS: Finance | tax | law | budget | tax authority | Indonesia | revenue statistics | Tax

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