Finance Minister Suahasil Nazara estimates that the value of tax incentives provided by the government in 2026 will reach IDR 576.4 trillion, equivalent to 2.24% of gross domestic product (GDP).
Suahasil explained that tax incentives represent revenue that the government forgoes through various tax policies. Although the funds are not collected as state revenue, they continue to circulate within the economy and are expected to support consumption and investment.
“For 2026, we estimate that IDR 576 trillion will not be collected by our tax authorities, but will continue to circulate among the public and support consumption and investment,” Suahasil said in Jakarta on Wednesday (Sept. 23, 2026).
According to him, the government uses tax incentives as part of its fiscal policy to maintain purchasing power, attract investment, and improve business competitiveness.
The incentives are provided in various forms, ranging from tax exemptions and reductions to the application of specific tax rates for sectors or groups of taxpayers that meet certain criteria.
Sectors eligible for such facilities include micro, small, and medium enterprises (MSMEs), manufacturing, agriculture, trade, and construction.
Suahasil encouraged businesses to take advantage of the tax facilities prepared by the government. He said the incentive policies would be more effective if they were actually utilized by the targeted businesses.
“Those in the business sector can usually identify various incentives that they can take advantage of. And we want these incentives to be used once the policies have been introduced,” he said.
He also explained the impact of tax incentives on the calculation of the tax ratio. By including incentives equivalent to 2.24% of GDP, Indonesia’s tax ratio, which is illustratively around 10.1%, could reach approximately 12.3%.
Suahasil stressed that providing tax incentives does mean that some tax revenue does not flow into the state treasury. However, the funds remain within economic activity through consumption and investment.
“Indeed, the taxes are not collected. Does that mean state revenue decreases? Yes, that is true. But the money is not lost because these tax incentives continue to circulate within our economy,” he said.
3 Fiscal Strategies
In addition to using tax incentives, the government is preparing three main strategies to strengthen fiscal and state budget management.
The first strategy is to increase state revenue, including by strengthening the tax ratio. The government will pursue this by improving taxpayer compliance, expanding the tax base, and optimizing the use of the Coretax system.
Suahasil said the digitalization of tax administration is expected to make it easier for taxpayers to fulfill their obligations. One example is the availability of withholding tax certificates in the Coretax system, meaning taxpayers no longer need to request them separately from their employers.
“This will make it easier for our taxpayers to file their tax returns quickly and effectively,” he said.
The government will also adjust tax policies to changes in the economic structure, including developments in the digital economy and global economic conditions. Optimizing sources of state revenue is also part of the strategy.
The second strategy focuses on improving the quality of government spending. Suahasil said the state budget needs to be used more effectively by ensuring that funds are directed toward programs that have an impact on economic growth and public welfare.
According to him, budget efficiency does not simply mean reducing spending. It also involves setting priorities and ensuring that every budget allocation supports programs that deliver economic and social benefits and are aligned with the government’s agenda.
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