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Tax Kaleidoscope 2024: A Reflection of Change (Part 1)

KUP

24 Des 2024, 02.55 WIB

As 2024 draws to a close, it's a good time to reflect on the significant events and developments that have shaped the year. Taxes, as a fiscal tool, have played a crucial role in influencing the government's economic strategies throughout the year. Here's a review of the key tax events that unfolded in 2024.


Even before the fiscal year began in January 2024, the government had already set the 2024 State Budget (Anggaran Pendapatan dan Belanja Negara / APBN). According to the APBN document, the state revenue target for 2024 was set at Rp2,802.3 trillion, reflecting a 6.3% increase from the previous year (Kemenkeu, 2024). This target included tax revenue of Rp2,309.9 trillion, non-tax revenue of Rp492.0 trillion, and grant income of Rp0.4 trillion.


January


By the end of January 2024, the government had successfully collected Rp172.16 trillion in state revenue, comprising Rp149.25 trillion in tax revenue and Rp22.91 trillion in non-tax revenue (APBN Kita, 2024). Starting in January 2024, the government implemented the Average Effective Rate (AER) for calculating Article 21 income tax. This change was formalized through the Minister of Finance Regulation (Peraturan Menteri Keuangan / PMK) Number 168 of 2023, which stipulated that the AER procedure for calculating Article 21 income tax would take effect from January 1, 2024.


Additionally, in the same month, the government reduced the Certain Goods and Services Tax (Pajak Barang dan Jasa Tertentu / PBJT) rates, including arts and entertainment taxes, by up to 10%. Previously, the highest PBJT rate for arts and entertainment services was set at 35%. This reduction aimed to align PBJT rates with other consumption-based levies such as food and beverages, electricity, hotel services, and parking services (Kemenkeu, 2024).


In January 2024, the Director General of Taxes (DGT) also issued Regulation Number PER-2/PJ/2024, which outlined the format and procedures for preparing Article 21 income tax and/or Article 26 withholding receipts, as well as the format, content, filing procedures, and submission procedures of periodic Article 21 income tax returns and/or periodic Article 26 income tax returns. These regulations mandated that withholding agents must create, provide, and report withholding tax slips to the DGT.


February


In February 2024, the government collected Rp400.36 trillion in state revenue, representing a 4.52% decrease from the same period the previous year (year on year). This revenue included Rp320.51 trillion in tax revenue, Rp79.71 trillion in non-tax revenue, and Rp0.14 trillion in grants (Kemenkeu, 2024).


An important event in February 2024 was the Constitutional Court of the Republic of Indonesia's decision to reject the proposal to separate the DGT from the Ministry of Finance. The court opined that such a separation was an open legal policy, as stipulated in Article 17 Section (4) and Article 23 of the 1945 Constitution (detik, 2024).


Additionally, the government identified 112 countries as participating jurisdictions and 83 countries as reporting jurisdictions for the Automatic Exchange of Financial Account Information. This initiative aligns with the provisions of Article 16 Point a and Point b of PMK Number 70/PMK.03/2017, as amended by PMK Number 19/PMK.03/2018 regarding technical instructions on financial information access for tax purposes and follow up on jurisdictions that have signed and/or activated the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (DJP, 2024).


In addition, in February 2024, the government also issued PMK Number 7 of 2024, which addresses Value-Added Tax (VAT) on the sale of landed houses and residential units borne by the government in the 2024 fiscal year. Similarly, PMK Number 8 of 2024 was also issued to regulate VAT for the delivery of certain four-wheeled battery electric vehicles (BEVs) and certain bus BEVs borne by the government.


March


March was a particularly busy month for the DGT, marking the deadline for submitting Annual Individual Income Tax Returns. The DGT made extensive preparations to ensure the smooth execution of this national event. By March 31, 2024, a total of 13,141,719 individual taxpayers had submitted their Annual Tax Returns, representing a 6.88% increase from the previous year. In 2023, the number of individual taxpayers who submitted their Annual Tax Returns was 12,295,752.


Despite this, the Ministry of Finance noted an 8.18% decrease in tax revenue for the January to March period compared to the same period in 2023. In March alone, total tax revenue collected amounted to Rp462.91 trillion, comprising Rp393.91 trillion in tax revenue and Rp68.00 trillion in customs and excise duties revenue. This decline was attributed to volatility in commodity prices, which increased tax refunds and reduced corporate income tax revenue.


April


April, on the other hand, was the deadline for corporate taxpayers to submit their Annual Tax Returns. By the end of April 2024, 1,044,911 corporate taxpayers had filed their Annual Tax Returns, reflecting a 10.66% increase from the previous year. The DGT also reported a 7.15% overall increase in compliance compared to the same period the previous year. By April 30, 2024, a total of 14,186,630 tax returns had been submitted by both individual and corporate taxpayers, representing 73.61% of those required to file (DJP, 2024).


In terms of revenue, the Ministry of Finance noted that by the end of April 2024, tax revenue collected by the DGT amounted to Rp19 trillion, marking a 9.29% contraction from the same period the previous year. This decline was primarily due to commodity price volatility and an increase in coal industry tax refunds. Looking at the details, tax revenue of Rp625.19 trillion was primarily made up of Rp377.00 trillion from income tax and Rp218.50 trillion from value-added and luxury-goods sales tax. The Ministry of Finance noted that income tax and value-added and luxury-goods sales tax contributed 60.04% and 35.01% to total tax revenue respectively (Kemenkeu, 2024).


In April 2024, there were significant changes to business processes related to VAT centralization. Through the DGT, the government announced that taxpayers who failed to submit their VAT payable centralization location notification by April 30, 2024, would have their VAT centralized by the DGT starting July 1, 2024 (DJP, 2024). This decision was based on PMK Number 136/PMK.03/2023, which amended PMK Number 112/PMK.03/2022 regarding taxpayer identification numbers for individual, corporate, and government agency taxpayers.


Additionally, in April 2024, the DGT issued the Director General of Taxes Regulation Number PER-3/PJ/2024, which was the third amendment to the Director General of Taxes Regulation Number Per-04/PJ/2022. This regulation pertained to agencies or institutions established or authorized by the government to receive zakat or obligatory religious donations deductible from gross income. Through this provision, the government designated specific zakat collection agencies, national and provincial-scale zakat collection institutions, zakat, infaq, and sadaqah collection institutions, and other religious institutions to receive zakat or obligatory religious donations deductible from gross income.


May


Commodity price volatility continued to pose a risk to state revenue up to May 2024. Consequently, tax revenue declined by 8.44% compared to the same period the previous year (year-on-year). By the end of May 2024, total tax revenue collected reached Rp760.38 trillion, representing 38.23% of the APBN target. This figure primarily consisted of income tax revenue amounting to Rp443.72 trillion and VAT and luxury goods sales tax revenue of Rp282.34 trillion.


In May 2024, the government also issued PMK Number 28 of 2024 regarding Tax and Customs Facilities for the Nusantara Capital City. Under this regulation, the government provided incentives for income tax, VAT, luxury goods sales tax, and customs duties to taxpayers investing in Nusantara and its partner regions.


June


The Indonesian economy experienced a contraction and slowdown during the first half of 2024. As a result, by the end of June 2024, tax revenue had slowed by 9.88% compared to the same period the previous year (year on year). By the end of the first half of 2024, the government had collected Rp970.20 trillion in tax revenue, which accounted for 56.47% of the 2024 revenue target. This revenue was mainly supported by income tax revenue of Rp605.93 trillion, value-added and luxury-goods sales tax revenue of Rp356.77 trillion, land and building tax revenue of Rp1.79 trillion, and other taxes amounting to Rp5.7 trillion.


In June 2024, the government also stipulated the Director General of Taxes Regulation Number PER-5/PJ/2024, which amended the Director General of Taxes Regulation Number PER-17/PJ/2021. This amendment concerned the format and procedures for preparing tax withholding receipts, as well as the format, content, filing procedures, and submission procedures of periodic tax returns for government agencies.


These were the key events in Indonesia's taxation regime during the first half of 2024. In the next part, we will discuss the tax events and policies implemented by the government in the second half of 2024.


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