State Finance Draft Law Raises Proposal to Revise Budget Deficit

JAKARTA, DDTCNews - During deliberations on the State Finance Draft Law, Chairperson of the House of Representatives Commission XI, Mukhamad Misbakhun, has raised the option of revising the state budget (anggaran penerimaan dan belanja negara/APBN in Indonesian) deficit ceiling of 3%. This topic is among the subjects covered by national media today, Friday (18/9/2026).

Misbakhun highlighted that the state budget deficit ceiling has hitherto been stipulated only in the elucidation section of Law 17/2003 on State Finances, not in the main body of Article 12 of that law.

"People say the deficit is 3%, and when I ask which article stipulates this, no one can cite it. The deficit is not a legal norm; the deficit does not appear in the normative body and the debt ratio ceiling of 60% of the GDP does not appear there either," he said.

Article 12 of the State Finance Law comprises 4 paragraphs and makes no mention of any numerical APBN deficit ceiling or debt-to-GDP ratio. Those figures appear only in the Appendix to the Elucidation of the State Finance Law, in section II, Article by Article.

Misbakhun takes the view that there is a difference in legal standing between a legal norm contained in the main body of a law and one contained in the elucidation. He therefore questions whether the 3% deficit ceiling constitutes a binding legal norm.

"It is in the elucidation that the terms '3% deficit' and '60% of GDP debt ratio' were born. So the question now is: has the 3% figure become something utterly sacrosanct?" he said.

Further, Misbakhun is of the opinion that the government should not focus solely on how to avoid breaching the 3% deficit ceiling. In his view, a deficit exceeding 3% is a consequence or an end result of state financial management in which government expenditure exceeds revenue.

He would rather see the government shift its focus to the "cause" rather than the "effect". In his view, the government needs to examine whether the high levels of expenditure that give rise to the deficit have been allocated in the public interest, to promote economic growth, and to improve welfare.

"We always talk about the 3% deficit. It's an impact. It is the result of an equation in which our revenue is insufficient and, once spending is deducted, the deficit is born. We always discuss the effect, never the cause," said Misbakhun.

Misbakhun also stressed the importance of Indonesia escaping the middle-income trap, boosting economic growth and becoming a welfare state capable of guaranteeing social welfare, healthcare, education and the basic needs of all citizens.

In his view, the government needs to pursue expansion to achieve those objectives. Expansion, he continued, requires greater expenditure, inter alia on infrastructure, education, healthcare, productivity and other sectors.

"The question now is: when circumstances call for intervention, for example, we have a window of opportunity to lift 233 [million] people out of the middle-income trap towards high-income status, that requires growth expansion. How can we achieve growth expansion if we are rigidly constrained by the 3% ceiling?" Misbakhun asked.

Beyond the questions of legal substance and the government's mindset, Misbakhun considers that the setting of deficit and debt ratio ceilings as enshrined in the Maastricht Treaty is closely related to historical factors. In his view, the fiscal discipline embodied in the Maastricht Treaty at the time was aimed at unifying the member states of the European Union in 1992 following the end of the Cold War and at launching the euro currency.

Amid these proposals, the government has affirmed that it will maintain the state budget deficit ceiling below 3%. Deputy Minister of Finance Juda Agung stated that the government will consistently keep the state budget deficit below that threshold.

In his view, maintaining the state budget deficit below 3% forms part of the government's efforts to preserve the state's fiscal credibility.

"We remain consistently below 3%. That maintains fiscal credibility," said Juda.

In addition to this news, there is a review of efforts to optimise tax revenue towards year-end. There is also a discussion on the subject of tax officers and whether they can be replaced by artificial intelligence (AI).

Below is a full summary of today's tax articles.

Tax Reform to Control the State Budget Deficit

Juda considers tax reform to be one of the key policies of the Ministry of Finance (MoF) within Indonesia's fiscal strategy. In his view, tax reform needs to be implemented given that economic growth is targeted at 6% and the budget deficit at 2.4% of GDP.

Strong revenue is required to achieve both objectives. "Achieving both goals will require stronger revenue mobilisation, improved expenditure quality and prudent financing. Tax reform is therefore at the core of our fiscal strategy," he said.

However, he continued, tax reform cannot be pursued on ambition alone. Tax reform must be underpinned by a commitment to evidence-based policymaking. (DDTCNews)

DGT Remains Optimistic Tax Target Will Be Met

Following the inauguration of Minister of Finance, Suahasil Nazara, the Directorate General of Taxes (DGT) has been directed to continue securing tax revenue in the 3.5 months remaining before the end of the 2026 fiscal year.

Director General of Taxes, Bimo Wijayanto, stated that every tax office will carry out its duties and functions, particularly in collecting tax revenue whilst simultaneously improving taxpayer compliance. "We have only 3.5 months left, and we must fund construction, fulfil the target and maintain compliance to optimise sound economic activity," he said.

The tax target in the 2026 state budget is IDR2,357.7 trillion, but the government estimates that tax revenue will fall short by IDR46.9 trillion. As at August 2026, the DGT reports that tax revenue has grown by 27%, amounting to approximately IDR1,441.9 trillion. (DDTCNews)

AI Cannot Yet Replace Tax Officers

Senior Adviser to the Japan International Cooperation Agency (JICA), Naofumi Kosugi, is of the view that the advent of AI is not yet seen as capable of fully replacing the role of humans in tax administration.

Kosugi stated that AI only assists in calculating the tax that ought to be due and will not yet replace the role of tax officers. Despite its current limitations, he nonetheless encourages tax authorities to deploy AI to support the routine work of tax officers.

In his view, there are 3 matters that tax authorities need to bear in mind when using AI. First, the protection of taxpayer privacy and data security. Second, AI transparency and accountability. Third, the risk of AI hallucinations. (DDTCNews)

DGT Ready to Support Tax Research via Micro Data Provision

The DGT is committed to supporting research activities through the provision of micro data. Bimo stated that micro data is necessary to ensure that research on taxation does not remain confined solely to macro aspects.

"We will open access to certain micro data for researchers whilst maintaining data confidentiality and security. I am confident this will enable tax research to go further beyond the macro aspects," he said.

Bimo explained that certain micro data can be made available to support tax research provided it does not contain taxpayer identification. With adequate micro data, researchers can conduct more detailed analyses and develop simulations that yield an understanding of a variety of scenarios. (DDTCNews)

6 Stages for Managing Confiscated Objects & Goods & Asset Security

Through Director General of Taxes Circular Letter No. SE-10/PJ/2026, the DGT has established 6 stages for the management of confiscated objects, confiscated goods and/or tangible asset security.

These provisions have been established to establish standard procedures and uniformity in the management of confiscated objects, confiscated goods and/or tangible asset security, thereby ensuring that such goods are kept intact and that their security, safety and value are preserved.

"The management of confiscated objects, confiscated goods and/or tangible asset security consists of: a) handover...; b) storage; c) maintenance...; d) use; e) release; and f) submission of management reports,” reads Part E number 2 letter b number 10) of SE-10/PJ/2026. (DDTCNews) (dik)