Indonesia faces almost US$11b shortfall in 2015 tax revenue

[JAKARTA] Indonesia will likely have a shortfall of 150 trillion rupiah (US$10.92 billion) in tax revenue this year, the tax office said, a development that could mean a ballooning of its budget deficit.

When the Indonesian government set its tax targets for this year, many analysts said they were unrealistically high. A slowdown in Southeast Asia's largest economy has increased the difficulties officials face meeting 2015 collection targets.

At the end of September, the tax office had only collected collect 53 per cent of its full-year target. "In early June, my calculation of (tax) shortfall was 120 trillion rupiah. But seeing the deteriorating economic condition and strong dollar, we expect the shortfall to swell to 150 trillion rupiah," Sigit Priadi Pramudito, the finance ministry's director general of tax, told reporters on Wednesday.

His department oversees collection of all taxes except for excise ones and duties for exports and imports.

Originally, President Joko Widodo's government aimed to keep this year's budget deficit to 1.9 per cent of gross domestic product. With a revenue shortfall of 120 trillion rupiah, the deficit expands to 2.23 per cent of GDP.

An increase of the revenue shortfall could naturally widen the budget deficit, though Mr Pramudito did not speculate on how much it be.

Mr Pramudito said he hopes the government and parliament agree soon on a law on tax amnesty - a tax rate discount to encourage untaxed wealth disclosure - saying the move can boost revenue by 60 trillion rupiah this year.

The tax office has estimated there is around 3,000 trillion rupiah of Indonesian assets in Singapore, he said, without commenting on how much of that total is untaxed.

A tax amnesty draft bill is under discussion currently in Indonesia's parliament.

In a bid to attract investment and maintain people's buying power, Indonesia this year has offered a series of tax breaks that may further disrupt revenue flows. That includes a 15-year tax holiday for some firms, removal of luxury tax for most goods and a higher income threshold at which individuals start to pay tax.

The finance ministry is currently considering another type of tax break for firms that revalue their assets, Pramudito said.

REUTERS