HHP Law Claims To Close Regulatory Gaps Left Behind In Technology: 2023 Taxation Grows By IDR 162 Trillion

Head of BKF Ministry of Finance Febrio Kacaribu. (Photo: Screenshot of the Ministry of Finance's Zoom channel)

JAKARTA - The government through the Ministry of Finance (Kemenkeu) said that the Law on Harmonization of Tax Regulations (UU HPP) would spearhead the country in facing various economic challenges in the future.

Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu, said that this latest regulation is part of the tax reforms that have been in place since the 1980s.

“This is an important baton from the various reforms that have been carried out previously. The HPP Law brings tax performance closer to its potential level by improving administration and national taxation policies," he said in a press statement, Monday, October 11.

According to Febrio, from an administrative standpoint, the resulting policy closes various loopholes that still exist and adapts to new developments in the latest business activities. He revealed that this is related to the rise of digital-based businesses following the rapid advances in information technology.

"Meanwhile, in terms of taxation policy, the HPP Law will strengthen the aspect of justice in terms of the tax burden that must be borne by taxpayers, as well as support for strengthening the MSME sector which is the main actor in the national economy," he said.

Just so you know, the government is optimistic that tax revenues will increase by IDR 162 trillion to IDR 1,811.1 trillion in 2023 thanks to the Law on Harmonization of Tax Regulations.

This figure makes Indonesia's tax ratio rise to 9.2 percent of gross domestic product (GDP) from the previous 8 percent.

Meanwhile, the baseline for tax revenues if the HPP Law is not enforced is IDR 1,649 trillion in 2023 with a tax ratio at the level of 8.46 percent.

Meanwhile, this year's tax revenue is believed to reach Rp1,413.7 trillion and in 2022 it will reach Rp1,649 trillion.

“The HPP Law reflects the government's commitment to comprehensive fiscal policy reform. Continuous improvement on the expenditure side through various efforts to strengthen the efficiency and effectiveness of the budget must be accompanied by strengthening on the revenue side,” concluded Febrio.