Indonesia Tops Global Ranking for Tax Expenditure Transparency
Jakarta, TopBusiness – Fiscal policy plays an important role as a government instrument in maintaining stability and strengthening national economic resilience amid a challenging global environment. This was stated by Deni Surjantoro, Head of the Bureau of Communications and Information Services at the Ministry of Finance, on the ministry’s website kemenkeu.go.id, in Jakarta. With fiscal policy managed optimally, Indonesia’s economy in Q1 2026 showed strong performance. The Indonesian economy grew 5.61% year on year, supported by resilient domestic demand, rising investment, and accelerated Government spending to support activity of the people and the business world. This achievement reflects how fiscal policy can cushion external pressures, maintain economic stability, and support national economic growth.
Tax policy is one of the strategic fiscal policy instruments used adaptively yet prudently to support stability and strengthen national economic activity. This support includes providing selective, targeted, and measurable tax incentives, while continuing to observe fiscal space. The policy aims to maintain purchasing power of the people, strengthen UMKM and the business sector, encourage investment, and sustain momentum of national economic activity. Through proper governance, the economy can be driven optimally while state finances remain sound.
In Q1 2026, support of fiscal policy through tax incentives also supported investment momentum and real economy activity. Investment (Gross Fixed Capital Formation/PMTB) grew strongly at 5.96% year on year, reinforcing growth in productive sectors of the national economy. This aligns with data from the Investment Ministry showing direct investment realised growth of 7.22%.
To ensure these policies are managed transparently and accountably, the Government has consistently strengthened reporting of tax expenditure through the Tax Expenditure Report (TER). Through this report, the public can view various tax facilities provided by the state, including value, policy objectives, tax type, beneficiary sectors, and the direction of its support for the economy and for citizens’ welfare. Thus, tax expenditure reporting becomes an important part of the governance of the state budget (APBN) because it ensures each incentive can be monitored collectively.
The commitment to reporting transparency has also gained international recognition. In the Global Tax Expenditures Transparency Index (GTETI), officially released on 11 May 2026, the Indonesian TER topped the ranking of 116 countries. This result exceeded several advanced economies such as South Korea, Australia, Canada, Germany, the Netherlands, and France. The position also shows a consistent upward trend since the index was first launched in 2023. Back then, Indonesia was ranked 15th; in 2024 it rose to 2nd, and this year Indonesia leads at the top position.
The Ministry of Finance remains committed to strengthening the quality of transparency in tax expenditure as a key part of sound and accountable fiscal governance. The effort will continue to be strengthened through improvements in reporting quality, as well as monitoring and evaluating the use of incentive policies to be more measurable and to deliver optimal benefits for the economy.
GTETI is the world’s first comparative index that assesses the reporting practices of incentives or tax expenditure globally. The index is built on data from the Global Tax Expenditures Database (GTED) and ranks countries based on the regularity, quality, and breadth of information in published tax expenditure reports.
Meanwhile, the tax incentives reported in the TER reflect the Government’s alignment with the public and UMKM, while also supporting the investment climate. Households and UMKM receive more than 70% of total tax expenditure, or around Rp389 trillion in 2025. These incentives are provided to support basic needs such as food and housing, reduce costs of education, health, transport, and so on. The incentives also contribute to job creation and to an increasingly improved quality of life for the people.