OECD Findings: Indonesia's Income Tax Revenue Sluggish, Overly Dependent on Consumption
The Organisation for Economic Co-operation and Development (OECD) has recorded that income tax (PPh) revenue in Indonesia is increasingly sluggish, whereas taxes on the consumption of goods and services are strengthening and have become the largest source of tax revenue.
In its latest report titled ‘Revenue Statistics in Asia and the Pacific 2026’, the OECD noted that of the total tax revenue in 2024 amounting to Rp2,620.67 trillion, an increase of 4.12% from the previous year, the largest portion came from taxes on goods and services valued at Rp1,128.66 trillion, equivalent to 43.07%.
Meanwhile, revenue from income tax amounted to Rp1,061.94 trillion, or 40.52%. The remainder came from other taxes totalling Rp278.69 trillion (10.63%), social security contributions of Rp112.07 trillion (4.28%), and property taxes of Rp39.29 trillion (1.5%).
Total revenue from consumption taxes experienced a fairly strong increase of 7.47% compared to the 2023 record. In contrast, income tax in Indonesia only managed to grow by 0.07%.
Looking back, according to OECD records from 2022 to 2023, income tax revenue growth was still able to reach 6.31%, with a value increasing from Rp998.21 trillion to Rp1,061.23 trillion. Meanwhile, consumption taxes grew by 4.41% from Rp1,005.8 trillion to Rp1,050.17 trillion.
The sluggishness in the income, profit, and capital gains tax category from 2023 to 2024 was inseparable from the decline in corporate tax revenue from Rp829.66 trillion to just Rp818.30 trillion. This was compounded by a decrease in profit taxes from Rp814.05 trillion to Rp802.45 trillion.
On the other hand, all components of taxes on goods and services consumed by the public experienced growth, such as Value Added Tax (VAT) which grew 9.33% from Rp739.67 trillion to Rp808.75 trillion.
In this latest report, the OECD also noted that the Indonesian government had no mechanism for collecting taxes on net wealth, including gift taxes and inheritance taxes, up to the research period in 2024.