Tax Revenue Is Estimated To Drop In Early 2025, Galitax And New Formula PPh 21 Are The Causes

JAKARTA - Tax observer from the Center for Indonesia Taxation Analysis (CITA) Fajry Akbar estimates that tax revenue performance in early 2025 will decline.

According to him, this decline was caused by two main factors, namely operational risks related to the core tax system and corrections from the TER mechanism.

Fajry said that for the beginning of the year there were operational risks, especially in terms of tax administration such as VAT and VAT, which are expected to interfere with tax revenue performance at the beginning of the year.

"We know that the system does not run smoothly, many taxpayers have difficulty administering taxes, both VAT and VAT, for example, having difficulty issuing tax invoices in January through core tax," he told VOI, Thursday, March 6.

Furthermore, Fajry conveyed that the second factor was the correction to PPh 21 acceptance due to the TER mechanism.

According to him, the impact of this correction can be seen in January, because the PPh 21 cuts that occurred in December were only deposited and reported by the company the following month, namely January 2025.

However, Fajry said that currently the decline in revenue due to operational risks is estimated to be temporary at the beginning of the year, unless problems related to core tax continue and affect real economic activities, not only tax administration and if this happens, the impact could affect the annual tax revenue performance or year on year (yoy).

"For the full one year performance, I see that economic conditions are still the main factor determining the performance of tax revenues this year," he added.

Historically, Fajry said that a decline in the economy could lead to a decrease in the tax ratio.

In addition, there are several institutions projecting that this year's economy will be better than last year, while others predict economic conditions will weaken.

"I see that economic conditions are still the main factor determining the tax revenue performance this year," he added.

However, according to him, there are several macroeconomic indicators at the beginning of the year showing the risk of lowering the tax ratio.

Therefore, Fajry said the government needs to encourage economic growth more quickly if the economy can grow between 5.7 percent to 5.8 percent this year, the tax ratio (in a narrow sense) is estimated to increase to 11 percent.

"What the government needs to do is, remove what hinders economic cycles such as extortion (and other high-cost economic causes), corruption, unhealthy competition, economic rent, and so on," he explained.

On the other hand, Fajry conveyed that the Directorate General of Taxes (DJP) needs to make extra efforts in monitoring, extensification, law enforcement, and tax collection.

In terms of supervision, Fajry explained that based on 2021 data, the capacity of the tax authority is actually sufficient, but it needs to be strengthened by data support from third parties to increase the effectiveness of supervision.