Tax Ratio Becomes Main Focus, Not Nominal Revenue Target

Author Bayu Agatyan, Head of Tax Policy at the West Sumatra Treasury Office, stated on 10 November 2025 that Indonesia continues to prioritize nominal tax‑revenue targets.

Such an approach creates structural distortions because it ignores the level of formalisation, productivity and competitiveness of the tax base. Gross Domestic Product (GDP) data are released only two to three months after the period, limiting real‑time calculation of a tax ratio. Agatyan proposes using the tax ratio—tax revenue as a percentage of GDP—as the main performance indicator for a fairer assessment.

A 15 % tax‑to‑GDP ratio by 2029 would help shrink the shadow economy, improve voluntary compliance and strengthen fiscal sovereignty. Achieving this does not require higher rates but better data integration, transfer‑pricing enforcement and gradual formalisation of micro, small and medium enterprises.