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ax amnesty included in Prolegnas, tax compliance will actually decrease
The government will hold a tax incentive program, namely the third tax amnesty. This program has been included in the 2025 National Legislation Program (Prolegnas).
Reflecting on the poor realization of the two tax amnesty implementations (2008 and 2016-2017) as well as various other tax discount programs, such as the 2022 Voluntary Disclosure Program (PPS), tax holidays , tax allowances , and Luxury Goods Sales Tax (PPnBM), the success of this third tax amnesty program is doubtful.
Given the current economic conditions, tax amnesty should ideally only be implemented once per tax generation . The government's diligence in providing tax amnesty seems to be driven by political factors rather than sustainable economic factors. In this context, it is clear that policymakers view the program not simply as an alternative to tax increases, but as another form of primary revenue source or even wealth preservation.
Reflecting on the poor realization of the two tax amnesty implementations (2008 and 2016-2017) as well as various other tax discount programs, such as the 2022 Voluntary Disclosure Program (PPS), tax holidays , tax allowances , and Luxury Goods Sales Tax (PPnBM), the success of this third tax amnesty program is doubtful.
Given the current economic conditions, tax amnesty should ideally only be implemented once per tax generation . The government's diligence in providing tax amnesty seems to be driven by political factors rather than sustainable economic factors. In this context, it is clear that policymakers view the program not simply as an alternative to tax increases, but as another form of primary revenue source or even wealth preservation.
It should be noted that to spur economic growth by 8%, tax revenues of up to 16% of GDP are needed . Tax relief generally relies on macroeconomic strategies, such as increasing tax compliance to increase the tax base in the future, repatriating capital abroad (or capital flight), and providing state revenue quickly.
The 2025 State Budget state spending plan reached Rp3,621 trillion or grew more than 10% from the 2024 State Budget which was worth Rp3,325 trillion. In a very narrow fiscal space, the government then targeted debt financing of Rp775.8 trillion in the 2025 State Budget .
Since 2019, the government has relied more on fiscal financing debt instead of optimizing tax absorption on property or corporate profits and capital, etc. As a result, government debt interest has soared by 289% and the ratio of interest payments to state revenues has reached 18.1%—the highest in Southeast Asia.
The 2025 State Budget state spending plan reached Rp3,621 trillion or grew more than 10% from the 2024 State Budget which was worth Rp3,325 trillion. In a very narrow fiscal space, the government then targeted debt financing of Rp775.8 trillion in the 2025 State Budget .
Since 2019, the government has relied more on fiscal financing debt instead of optimizing tax absorption on property or corporate profits and capital, etc. As a result, government debt interest has soared by 289% and the ratio of interest payments to state revenues has reached 18.1%—the highest in Southeast Asia.