The Ministry of Finance is preparing a series of tax reform measures to support the fiscal targets set out in the 2027 Draft State Budget (RAPBN).
Deputy Minister of Finance Juda Agung said the government is targeting 6% economic growth in 2027, with the budget deficit set at 2.4% of gross domestic product (GDP). The deficit target is lower than the projected 2026 state budget deficit of 2.85% of GDP.
According to Juda, achieving these targets will require a combination of stronger state revenue mobilisation, improved spending quality, and prudent financing management. Against this backdrop, tax reform is emerging as a key instrument of fiscal policy.
“To achieve these two objectives, we need stronger revenue mobilisation, better spending quality, and prudent financing. That is why tax reform is a key part of our fiscal strategy,” Juda said at the International Tax Conference 2026 in Jakarta on Wednesday (Sept. 16, 2026).
Three Reform Agendas
Juda said the government is pursuing tax reform through three main agendas. First, to modernise tax administration while simplifying compliance processes. The government is relying on Coretax as a digital system that integrates various tax administration services and processes.
However, Juda said further development of Coretax is needed to improve the quality of services provided to taxpayers. One key measure of success is the taxpayer experience when interacting with the tax system.
“The true measure of success should be the taxpayer experience — how easy it is to register, file and pay taxes, how accurate the data is, and how quickly problems can be resolved,” he said.
Second, to broaden the tax base while improving compliance and maintaining fairness.
Juda said the government needs to leverage administrative data and information from third parties to identify gaps and weaknesses in the tax system. Simplifying procedures is also necessary to make it easier for businesses to enter the formal sector and fulfil their tax obligations.
Third, strengthening a tax system that is fair, provides certainty, and can respond to changes in the global economy.
This includes strengthening international tax cooperation, enhancing legal certainty and dispute resolution mechanisms, and developing policies that take into account the diverse characteristics of taxpayers.
Juda stressed that the success of tax reform is also closely linked to public trust in the government. Such trust depends not only on how taxes are collected, but also on the transparency and effectiveness of how state revenue is used.
“Ultimately, trust depends not only on how we collect taxes, but also on how transparently and effectively that revenue is used,” he said.
Technology as a Key Enabler
Technology is another important component of tax reform. Juda said the use of big data and artificial intelligence (AI) could help the government unlock revenue potential more effectively.
At the same time, fiscal policy needs to strike a balance between supporting economic growth and maintaining fiscal sustainability. The government therefore needs to strengthen revenue, improve spending effectiveness, and manage financing prudently.
Juda said tax reform cannot rely solely on policy changes. Each measure needs to be supported by data and research to ensure that policies are based on a solid foundation.
“However, meaningful tax reform requires more than policy ambition. It requires strong evidence and a firm commitment to evidence-based policymaking,” he said.
Strengthening the Role of Research
To strengthen the research base for policymaking, the Ministry of Finance has once again opened a call for papers for academics and researchers this year.
The programme carries the theme “Transforming Tax Policy and Administration to Drive Sustainable Growth and Revenue in the Digital Economy”.
Juda said the theme reflects the changing tax environment facing the government, particularly amid the continued development of the digital economy.
He called on the Directorate General of Taxes (DGT), together with the Directorate General of Economic and Fiscal Strategy (DJSEF) at the Ministry of Finance, to identify issues and research questions that can address policy needs.
The Ministry of Finance is also encouraging researchers to have opportunities to engage directly with policymakers and officials involved in tax administration on the ground.
“Where possible, test various reform proposals, measure the results, and use the findings to inform both policy decisions and day-to-day tax administration,” Juda said.
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