2027 Tax Expenditure Hits IDR632T, Manufacturing Takes Largest Share
JAKARTA, DDTCNews — Tax expenditure next year is projected to reach IDR632 trillion, growing 9.6% compared with this year's tax expenditure projection. This topic is among the reviews covered by national media today, Wednesday (19/8/2026).
Tax expenditure itself arises from tax revenues that are not collected due to deviations from general tax provisions. The development of tax expenditure values also reflects the dynamics of economic activity.
"The development of tax expenditure values reflects the dynamics of national economic activity as well as the utilisation of various tax facilities provided by the government," the government stated in the financial note of the draft state budget (rancangan anggaran penerimaan dan belanja negara/RAPBN in Indonesian) 2027.
In addition, the development of tax expenditure is also influenced by changes in the tax base, the direction of tax policy as well as the level of uptake of incentives by the public and entrepreneurs.
Broken down by tax type, tax expenditure continues to be dominated by value added tax (VAT) expenditure. The value of VAT expenditure in 2027 is projected to reach IDR413 trillion, or 65.3% of total projected tax expenditure. Income tax expenditure is projected to reach IDR184.6 trillion.
Broken down by sector, the manufacturing sector is recorded as set to benefit from tax expenditure of IDR166.1 trillion next year, higher than any other sector. This is followed by the agriculture, forestry and fisheries sectors at IDR70.7 trillion.
Then, trade at IDR66.5 trillion; health services and social activities at IDR62.4 trillion; and financial services and insurance at IDR58.5 trillion.
Please note that government-borne (ditanggung pemerintah/DTP in Indonesian) tax incentives are no longer categorised as tax expenditure. Nevertheless, government-borne incentives remain regarded as an important part of fiscal policy.
"This reclassification does not diminish the strategic role of tax incentives in supporting government policy," the government stated.
In addition to the above topic, there is a review of a new feature in the Directorate General of Taxes' (DGT) Coretax system whereby data from Attachment 4A of the Corporate Annual Income Tax Return can be downloaded all at once. There is also a discussion relating to extreme tax extensification, the designation of tax Supreme Court justices, the 2027 tax revenue target and other matters.
The following is a comprehensive review of the tax articles.
House: Tax Expenditures Must Deliver Real Benefits
Member of Commission VI of the House of Representatives(Dewan Perwakilan Rakyat/DPR in Indonesian), Budi Sulistyono, has urged the government to ensure that tax facilities covered under tax expenditure can deliver concrete benefits for the wider public.
In his view, facilities such as tax exemptions or reductions must provide real, tangible benefits that can be felt by the public. Such facilities could, for example, be granted to companies that bring new technology and knowledge to Indonesia.
Furthermore, tax facilities can be granted to companies, factories, or investors that create employment opportunities for the public. Tax facilities can also be directed at encouraging inward investment or business activities that are environmentally friendly, as well as the domestic production of goods. (DDTCNews/Kontan)
Extreme Extensification Is Urgent
Extreme extensification is deemed a solution worth considering by policymakers to achieve next year's tax revenue target. These measures include raising tax rates on consumption and imposing new excisable goods.
Citing the 2027 draft state budget, the tax revenues target has been set at IDR2,908 trillion. Of that amount, IDR2,591.4 trillion originates from tax revenues and IDR316.6 trillion from customs and excise revenues.
Tax experts also consider achieving that target to be quite challenging if the tax authority does not pursue extreme extensification. Moreover, tax revenue growth in 2027 is projected at 12.1%, well above the natural growth rate of 8.5%–9%. (Bisnis Indonesia)
House Names 3 Tax Court Justice Candidates as Supreme Court Justices
House of Representatives, through a plenary session, has formally approved 11 Supreme Court (Mahkamah Agung/MA in Indonesian) justice candidates and 3 ad hoc justice candidates who passed the fit and proper test before Commission III of the House.
Of the 11 justice candidates declared to have passed the fit and proper test, 3 are candidates for the State Administrative Court (tata usaha negara/TUN in Indonesian) chamber specialising in taxation.
The three tax state administrative court justice candidates who formally received approval as Supreme Court justices are: LY Hari Sih Avianto; Maftuh Effendi; and Yeheskiel Minggus Tiranda. (DDTCNews)
New Coretax Feature: L4-A Corporate Tax Return Data Bulk Download
The Directorate General of Taxes (DGT) has added a download-all feature for excel data in Attachment 4 Section A (L4-A) of the Annual Income Tax (PPh) Return for corporate taxpayers in the coretax application.
The addition of this feature is intended to allow taxpayers to download all withholding slip data for final income tax in a single excel file. This update implies that taxpayers can view all income data subject to final income tax in its entirety, rather than page by page.
"The advantages and benefits of the feature are: bulk download: download all withholding receipt data in a single excel file; and not page by page: data is retrieved in full, no longer split across pages," explained a DGT tax instructor. (DDTCNews)
Purbaya Not Yet Keen to Impose New Taxes Next Year
Minister of Finance, Purbaya Yudhi Sadewa, has stated that the government does not yet plan to introduce new taxes next year. In his view, there would be room for new taxes if the national economy is able to grow by 6% for several consecutive quarters.
"If growth reaches 6%, will I immediately impose taxes? If it is only one quarter, perhaps not yet, but that room would open up considerably," he said.
Purbaya stated that the imposition of new taxes will be implemented by taking into account economic conditions over several quarters and people's purchasing power. He also prefers to continue improving the collection efforts of the tax authority. (DDTCNews)
VAT Exceeds IDR1,000 Trillion: Breakdown of Tax Targets in the 2027 Draft State Budget
The government has detailed the tax revenue targets proposed in the draft state budget 2027. Referring to the financial note of the draft state budget 2027, the income tax target for next year is proposed at IDR1,277.7 trillion, growing 9.9% compared with the income tax outlook for 2026.
Next year, VAT and sales tax on luxury goods (STLGs) revenues are targeted to reach IDR1,126.1 trillion, representing a rise of 13.4% compared with this year's VAT and STLGs outlook. With regard to other tax revenues, the government has proposed a target of IDR159 trillion, growing 25.2%.
Meanwhile, land and building tax (L&B Tax) revenue for next year is proposed at IDR28.6 trillion, growing 3.5%. This growth is supported by improved commodity prices, increased natural resource production and reduced normalisation pressures from previous years. (DDTCNews)
