World Bank Flags Taxable Person Threshold and VAT Exemption Facility
JAKARTA, DDTCNews - The World Bank is urging the government to reduce the taxable person (pengusaha kena pajak/PKP in Indonesian) threshold from IDR4.8 billion to just IDR500 million. This topic is among the reviews covered by the national media today, Monday (3/8/2026).
In a report entitled Indonesia: Unlocking Businesses' Tax Potential for Growth, the World Bank views this step as necessary to increase the number of businesses entering the tax administration system.
"Reducing the VAT registration threshold from IDR 4.8 billion to IDR 0.5 billion would incorporate more businesses into the tax system, encouraging formal transactions between small and large firms," the World Bank stated.
The World Bank estimates that approximately 66.4% of formal companies in Indonesia have a turnover of less than IDR1 billion, and 46.9% are estimated to have a turnover below IDR500 million.
Lowering the VAT registration threshold to IDR500 million would increase the burden on businesses that attempt to split their operations to avoid the obligation to collect VAT from consumers.
Beyond this, the World Bank also encourages Indonesia to nullify various VAT exemption facilities. At present, the government still applies VAT exemptions across a range of sectors.
Reducing VAT exemption facilities would align Indonesia's VAT system with international best practice, which in effect embraces a simpler VAT system.
"Simplifying the VAT system in this way would not only broaden the tax base but also improve compliance by reducing distortions and complexity," the World Bank wrote.
Both measures, namely reducing the VAT registration threshold and VAT exemptions, would generate additional tax revenue equivalent to 0.5% of the GDP.
In addition to the above topics, there are reviews regarding the need for the Directorate General of Taxes (DGT) to continuously update technical information on the collection of Article 22 Income Tax by marketplace providers. There is also a discussion on VAT collection via the SPP-TDLN mechanism, industrial parks, QRIS, tax evasion and other matters.
Below is a full review of the tax articles.
World Bank Survey: 48% of MSMEs Limit QRIS Use to Avoid Tax Monitoring
In a World Bank survey of micro entrepreneurs, 48% of respondents admitted to limiting their use of QRIS to avoid tax obligations. The survey is included in the report entitled Indonesia: Unlocking Businesses' Tax Potential for Growth.
The same survey also revealed another equally important issue. As many as 40% of micro enterprises believe that the taxes they pay will simply be wasted on inefficiency and corruption, reflecting a low level of trust in the management of state revenue.
The World Bank noted that although 62% of micro enterprises already hold a business bank account, the adoption of non-cash payments remains very low. Only 14% are willing to accept payment via bank transfer, whilst those accepting payment via QR code or digital wallet account for just 4%. (Kontan)
Beyond Art. 22 Income Tax, Marketplaces to Submit Taxpayer Data to DGT
Marketplace providers that have been designated as third parties are not only obliged to collect Article 22 Income Tax from domestic merchants.
Pursuant to Article 15 of Minister of Finance Regulation (MoF Reg.) 37/2025, there is a range of data and information that must be submitted by marketplace providers to the Directorate General of Taxes (DGT).
"The information referred to in paragraph (1) constitutes an integral unit of the attachments to Unified Periodic Income Tax Returns," reads Article 15 paragraph (2) of MoF Reg. 37/2025. (DDTCNews)
Transactions Not Yet Subject to PMSE VAT to Be Collected via SPP-TDLN
VAT collection through the cross-border digital transaction tax collection system (sistem pemungutan pajak transaksi digital luar negeri/SPP-TDLN in Indonesian) is to be applied to transactions that have not yet been subject to VAT under the electronic commerce (PMSE) VAT scheme.
Pursuant to Article 2 paragraph (2) of MoF Reg. 49/2026, VAT collection through the SPP-TDLN applies to the utilisation of intangible taxable goods from outside the customs territory within the customs territory in the form of digital goods, as well as taxable services from outside the customs territory within the customs territory in the form of digital services.
"The collection of VAT through the SPP-TDLN...constitutes the collection of VAT on cross-border digital transactions, whose collection of VAT is conducted by other than PMSE entrepreneurs that have been appointed as other parties by the Minister," reads Article 5 paragraph (1) of MoF Reg. 49/2026. (DDTCNews)
World Bank: One in Four Corporations Commits Tax Evasion
The tax evasion gap remains considerable. Evidence shows that 25% of corporations are known to engage in tax evasion, namely an illegal act aimed at reducing, concealing or avoiding tax payments.
This finding is contained in the World Bank report entitled Indonesia: Unlocking Businesses' Tax Potential for Growth, July 2026 edition. According to the World Bank, the prevalence rate of tax evasion among Indonesian companies stands at between 25% and 27%. In other words, 1 in 4 corporations engages in illegal conduct that is detrimental to the state.
This figure was derived from a double-list experiment methodology analysis based on the 2023 World Bank Enterprise Survey (WBES). (Bisnis Indonesia)
DGT Requested to Update Marketplace Income Tax Technical Instructions
The Indonesian E-Commerce Association (idEA) has requested that the DGT continuously update information on the technical provisions for the collection of Article 22 Income Tax by marketplace providers.
idEA Chairperson, Budi Primawan, stated that updating information on tax substance is crucial for online merchants (sellers) and marketplace providers for both parties to understand the policy that takes effect today.
"We hope that guidelines, FAQs and technical instructions from the DGT can be continuously supplemented to enable consistent implementation that provides certainty for both platforms and sellers," he stated. (DDTCNews)
Airlangga: Strengthening Industrial Parks Key to Attracting Investment
The government will continue to develop increasingly competitive industrial parks, in line with the downstream processing agenda, energy transition and digital transformation as well as capable of supporting the economic growth target of 8%.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that strengthening industrial parks is one of the government's strategies to reinforce Indonesia's position as an investment destination, particularly amid global competition.
"Industrial parks are the driving force of the nation, creating employment and improving welfare," he claimed. (DDTCNews)
