Tax Policy Aims to Support Purchasing Power and Economic Activity: Suahasil

Jakarta: Finance Minister Suahasil Nazara said Indonesia’s tax policy is designed not only to generate state revenue but also to provide incentives to maintain public purchasing power and support economic activity.

Suahasil said efforts to optimize state revenue must go hand in hand with the provision of tax incentives. The policy is part of the government’s fiscal strategy to support development and sustain economic activity.

“Many people say that we need to collect more revenue, and that is true. But at the same time, tax policy is not just about collecting taxes. It also includes policies that provide tax incentives,” the Finance Minister explained, according to the Ministry of Finance’s website on Friday, October 9, 2026.

Suahasil explained that each year, potential tax revenue equivalent to around 2.2% of gross domestic product (GDP) is not collected. He stated this policy serves as a tax incentive, allowing funds to continue circulating in society and supporting economic activity.

“If our tax ratio is considered low at 10%, the amount that could actually be collected is 12%. But two percentage points are deliberately not collected. Why? So that this money continues to circulate in society, which is part of the tax incentives,” the Finance Minister explained.

List of Tax Incentives

A number of tax incentives are provided in the form of exemptions, reductions, and special tax rates. These facilities cover value-added tax (VAT) and income tax, aiming to maintain purchasing power, encourage business activity, and help companies manage their cash flow.

The following are among the tax incentives introduced by the government:

• VAT exemption for home purchases priced at up to Rp2 billion.
• Workers in labor-intensive sectors earning up to Rp10 million per month receive an income tax facility, with tax payments made at the end of the year in accordance with applicable regulations.
• Facilities for micro, small, and medium enterprises (MSMEs). Businesses with annual turnover of up to Rp500 million are exempt from income tax on that amount. Meanwhile, MSMEs with annual turnover above Rp500 million and up to Rp4.8 billion are subject to a special tax rate of 0.5% of their turnover, in accordance with tax regulations.

Suahasil said the tax facilities are expected to help people engage in economic activities while fulfilling their tax obligations.

“We intend these facilities to help people run their businesses while continuing to meet their tax obligations and comply with tax regulations. This tax compliance will be part of the state budget’s responsibility, as I mentioned earlier, to collect Rp3.435 trillion next year,” the Finance Minister stated.


(Razaqa Hariz)