“The lowest 2014 tax realization in the last 25 years, extraordinary steps are needed in tax reform”
The cloud again hit Indonesia's tax revenues in 2014. The hustle and bustle of the election has added to the length of the tax cloud overhang. The low achievement of tax revenue in 2014 is a repetition of the less convincing performance in the previous year. The inability of the tax authorities to pursue targets indicates a crucial problem in the management and current Indonesian tax system.
Key points:
- Tax revenue realization in 2014 was 91,75%, the lowest in the last twenty-five years.
- Apart from the low level of taxpayer compliance, the fundamental aspect causing the low realization of tax revenues is the issue of the low ability of the tax authorities to collect taxes.
- Tax institutional reform is needed that is strong, authoritative, clean, accountable, supported by adequate regulations and human resources, autonomous, separate from the Ministry of Finance and directly under the president.