PB 37 – Disappearance of State Revenue from Illegal Financial Flows in the Fisheries and Coal Sector in Indonesia

For the first time in the last 12 years, Indonesia's revenue realization has exceeded the state budget target for the 2021 and 2022 fiscal years, which were recorded at 15,35 percent and 15,9 percent respectively higher than the state budget target (revised in 2022 by Presidential Decree 98/2022) (Ministry of Finance, 2022 & 2023). However, during the crisis impacted by the Covid-19 pandemic, the realization of state revenue also needed to be addressed in a balanced way, considering that the realization of state spending was recorded as exceeding the target. Realization of state spending reached IDR 2.784,4 trillion or 1,32 percent above the 2021 spending target.

On the other hand, study PRAKARSA (2022) stated that Indonesia has the potential to experience a loss of revenue for 10 years worth $ 5,58 billion or the equivalent of IDR 74 trillion. This loss is based on four tax sources, namely VAT, Royalty, Income Tax Article 22 (2,5%) and Income Tax (1,5%).

What kind of activity causes the potential loss of state revenue? Has there been no action taken to handle this adverse case? Then what are the recommendations offered to reduce the potential loss of state revenue?

Read the full PRAKARSA Policy Brief edition 37 “Potential Revenue Loss from Illicit Financial Flows in Fishery and Coal Sectors in Indonesia” below.

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