Ministry of Finance to Thoroughly Review Public Proposals for Fiscal Incentives
JAKARTA, DDTCNews – The Ministry of Finance will conduct an in-depth review of various public proposals related to the provision of fiscal incentives. The topic has become one of the highlights in national media today, Friday (16/5/2025).
Vice Minister of Finance Anggito Abimanyu expressed understanding that the business community wishes to seek tax incentives to grow their enterprises. However, the Ministry needs to carry out a thorough review to ensure that incentive plans do not burden the state budget (APBN).
"We are open to associations requesting incentives, but I must convey that in 2024 we had very substantial tax spending on incentives, higher than in previous years," he said.
Anggito explained that the Ministry of Finance must ensure the APBN remains stable in order to support various programmes this year. Therefore, the provision of incentives must also consider the balance between expenditure and state revenue.
He stressed that the deficit must not widen when incentives are disbursed, as the APBN deficit level would be one of the key indicators assessed by investors in Indonesia.
"Investors will certainly ask 'how is your fiscal position?' That is their number one question, especially when we look at the January-February data, which has not been particularly encouraging," he said.
Anggito also emphasised that tax incentives have their limits and are not unlimited. Nevertheless, he was not yet able to specify which tax incentives would be provided as stimulus for the business sector and the economy in the future.
"Incentives have their limits. We also need to ensure public spending is funded, that we do not increase the deficit, and that we remain prudent. We must not be overly generous," he said.
**Apindo Proposes Raising Non-Taxable Income Threshold**
The Indonesian Employers' Association (Apindo) considers it necessary for the government to raise the non-taxable income threshold (PTKP) as one strategy to boost domestic consumption, particularly among the middle-class population.
Apindo's Head of Labour Affairs, Bob Azam, believes the government-borne income tax (PPh 21 DTP) incentive for employees in labour-intensive sectors currently in effect is positive. However, the middle class still requires additional relief, such as an increase in the PTKP.
"Whatever form the incentive takes, it is certainly valuable, but it would be even better if we could raise their [middle-class] PTKP," he said.
**Pursuing OECD Accession, Prabowo Seeks Australian PM's Support**
President Prabowo Subianto has directly requested the support of Australian Prime Minister Anthony Albanese for Indonesia's accession process to the Organisation for Economic Co-operation and Development (OECD).
Prabowo noted that Australia's position within the OECD is significant enough to bolster Indonesia's foreign policy objectives, including during the accession process.
"I have conveyed Indonesia's hope that Australia will support us, as Australia is an important OECD member," he said.
**Maintaining Economic Stability Requires Stronger Spending and Investment**
Vice Minister of Finance Anggito Abimanyu considers improved government spending and increased investment as two prerequisites for a more stable Indonesian economy next year.
Anggito said the government would focus on these two aspects to safeguard the national economy amid global uncertainty, particularly given the turmoil caused by United States tariff policies.
"We must indeed be prepared. There are two things we are doing from the APBN side: strengthening public spending, and investment and downstream processing, although these take time," he said.
**OECD Updates Guidance on Global Minimum Tax Implementation**
The OECD has updated its guidance on the implementation of the global minimum tax (Global Anti-Base Erosion (GloBE) model rules). The guidance is contained in the consolidated commentary on GloBE rules. The document, released on 9 May 2025, also covers all administrative guidance released and approved by the Inclusive Framework from March 2022 to 31 March 2025.
**Indonesian Government to Capitalise on Trade War 'Pause'**
Negotiations between the US and China will be leveraged by Indonesia to re-evaluate its mitigation strategy against escalating trade tensions. Coordinating Minister for Economic Affairs Airlangga Hartarto said Indonesia needs to carefully respond to the 90-day de-escalation between the US and China. He noted this could present an opportunity for Jakarta to strengthen trade negotiations with Washington.
He also observed the dynamics of US tariff policies towards other countries, including the United Kingdom and China. The US has set a baseline tariff of 10 per cent for the UK, whilst China faces a 30 per cent tariff.
**Boosting Consumption and Business Activity Requires Incentives**
The government has been urged to disburse further incentives amid the sluggish domestic economy. The incentives sought are primarily those capable of stimulating household consumption and reviving business activity.
Among the proposals is tax incentives targeting business operators. The government is considered to need to relax final income tax rates for micro, small and medium enterprises (MSMEs). Additionally, corporate tax and regional tax relief is also needed, particularly for labour-intensive sectors.
Furthermore, the government should also provide non-tax incentives targeting individuals, such as energy and transport subsidies, to mitigate inflationary pressures on lower-middle-income groups.
Vice Minister of Finance Anggito Abimanyu expressed understanding that the business community wishes to seek tax incentives to grow their enterprises. However, the Ministry needs to carry out a thorough review to ensure that incentive plans do not burden the state budget (APBN).
"We are open to associations requesting incentives, but I must convey that in 2024 we had very substantial tax spending on incentives, higher than in previous years," he said.
Anggito explained that the Ministry of Finance must ensure the APBN remains stable in order to support various programmes this year. Therefore, the provision of incentives must also consider the balance between expenditure and state revenue.
He stressed that the deficit must not widen when incentives are disbursed, as the APBN deficit level would be one of the key indicators assessed by investors in Indonesia.
"Investors will certainly ask 'how is your fiscal position?' That is their number one question, especially when we look at the January-February data, which has not been particularly encouraging," he said.
Anggito also emphasised that tax incentives have their limits and are not unlimited. Nevertheless, he was not yet able to specify which tax incentives would be provided as stimulus for the business sector and the economy in the future.
"Incentives have their limits. We also need to ensure public spending is funded, that we do not increase the deficit, and that we remain prudent. We must not be overly generous," he said.
**Apindo Proposes Raising Non-Taxable Income Threshold**
The Indonesian Employers' Association (Apindo) considers it necessary for the government to raise the non-taxable income threshold (PTKP) as one strategy to boost domestic consumption, particularly among the middle-class population.
Apindo's Head of Labour Affairs, Bob Azam, believes the government-borne income tax (PPh 21 DTP) incentive for employees in labour-intensive sectors currently in effect is positive. However, the middle class still requires additional relief, such as an increase in the PTKP.
"Whatever form the incentive takes, it is certainly valuable, but it would be even better if we could raise their [middle-class] PTKP," he said.
**Pursuing OECD Accession, Prabowo Seeks Australian PM's Support**
President Prabowo Subianto has directly requested the support of Australian Prime Minister Anthony Albanese for Indonesia's accession process to the Organisation for Economic Co-operation and Development (OECD).
Prabowo noted that Australia's position within the OECD is significant enough to bolster Indonesia's foreign policy objectives, including during the accession process.
"I have conveyed Indonesia's hope that Australia will support us, as Australia is an important OECD member," he said.
**Maintaining Economic Stability Requires Stronger Spending and Investment**
Vice Minister of Finance Anggito Abimanyu considers improved government spending and increased investment as two prerequisites for a more stable Indonesian economy next year.
Anggito said the government would focus on these two aspects to safeguard the national economy amid global uncertainty, particularly given the turmoil caused by United States tariff policies.
"We must indeed be prepared. There are two things we are doing from the APBN side: strengthening public spending, and investment and downstream processing, although these take time," he said.
**OECD Updates Guidance on Global Minimum Tax Implementation**
The OECD has updated its guidance on the implementation of the global minimum tax (Global Anti-Base Erosion (GloBE) model rules). The guidance is contained in the consolidated commentary on GloBE rules. The document, released on 9 May 2025, also covers all administrative guidance released and approved by the Inclusive Framework from March 2022 to 31 March 2025.
**Indonesian Government to Capitalise on Trade War 'Pause'**
Negotiations between the US and China will be leveraged by Indonesia to re-evaluate its mitigation strategy against escalating trade tensions. Coordinating Minister for Economic Affairs Airlangga Hartarto said Indonesia needs to carefully respond to the 90-day de-escalation between the US and China. He noted this could present an opportunity for Jakarta to strengthen trade negotiations with Washington.
He also observed the dynamics of US tariff policies towards other countries, including the United Kingdom and China. The US has set a baseline tariff of 10 per cent for the UK, whilst China faces a 30 per cent tariff.
**Boosting Consumption and Business Activity Requires Incentives**
The government has been urged to disburse further incentives amid the sluggish domestic economy. The incentives sought are primarily those capable of stimulating household consumption and reviving business activity.
Among the proposals is tax incentives targeting business operators. The government is considered to need to relax final income tax rates for micro, small and medium enterprises (MSMEs). Additionally, corporate tax and regional tax relief is also needed, particularly for labour-intensive sectors.
Furthermore, the government should also provide non-tax incentives targeting individuals, such as energy and transport subsidies, to mitigate inflationary pressures on lower-middle-income groups.