It was the first time since 2008 – and the first time during Indonesian President Joko Widodo’s reign – that tax revenue exceeded the target. And there are several reasons behind this anomaly. Obviously, it helped that economic activity rebounded in 2021 after a weak performance in 2020 (although tax revenue is still not fully back at the pre-COVID-19-crisis levels). This economic activity includes Indonesia’s impressive trade performance as well as high commodity prices. Meanwhile, the adjustment of certain tax rates has also supported tax revenue (such as the increase in the stamp duty tariff to IDR 10,000 per piece).

But, possibly more importantly, Indonesia’s 2021 tax revenue target was the lowest since 2014 (due to the COVID-19 crisis). This low target certainly helped to achieve it. Meanwhile, the government’s tax revenue target for 2022 is still not too ambitious (in fact it is even below tax revenue realization in 2021, which likely was a year with less economic activity than 2022), and so this target should be met again in 2022.

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