Context:
Indonesia faces major challenges in mobilising domestic resources for sustainable development. De-spite steady economic growth over the last five years, the average tax ratios has been extremely low compared to other countries, while actual tax revenue collection had frequently fallen below targets. Due to this, the Indonesian government pushes several measures such as broadening the tax base, improving tax administration and improving the quality of government spending to support transfor-mation towards a low-carbon economy.
Objective
The Indonesian government is improving the conditions for financing the implementation of 2030 Agenda through fiscal policy and tax administration reform.
Approach & Result:
The project works with the Fiscal Policy Agency (BKF) to improve fiscal policy formulation in increas-ing government revenue and improving quality of government spending to support the implementation of the 2030 Agenda. Since 2019, the project has provided analysis and inputs to formulate the new Tax Law on Harmonization of Tax Regulations (UU HPP) such as VAT, income tax and carbon tax as well as analysis for fiscal sustainability, targeted subsidies, and low carbon economy, including cli-mate change fiscal frameworks and energy transition mechanism.
Also, the project in cooperation with Directorate General of Taxation (DJP) establishes the precondi-tions to improve validity of the tax data through data cleansing and migration for a new central tax system and development of mobile application (M-Pajak) as well as strengthens capacities of the tax administration on risk management and audit e.g. integration of risk-based corporate audit plan, utili-sation digital-business reporting xBRL (eXtensible Business Reporting Line) as the basis for increasing tax compliance.