Threat on 2016 Tax Target


On March 3, finally ministry of finance definitively inaugurated Ken Dwijugiasteadi to lead Directorate General of Taxes (DGT) after acting as a caretaker since previous DGT leader, Sigit Priadi Pramudito, resigned in end of November. Consolidation and fast action urgently to be done as high target are awaiting. As much as 1.360 trilyon should be reached, 30% rise from 2015 tax realization (1.060 trilyon). No wonder minister of finance has stated in media for a couple of times that it would possibly cause a daunting shortfall in national budget approximately 290 trilyon.
Global economy is still not showing recovery as abundant stock of oil and sharp declining demand lead to low oil price, moving around $30-36 per barrel, as well as weak demand of mining commodity. Gradual decline of Tiongkok economy growth since 2012 are also causing widespread effect throghout the world’s economy. China is one of the biggest consumer of oil and commodity to support their infrastructure based economy growth.
Those unfavourable conditions may harm tax revenue in 2016. Low oil price definitely erode revenue income tax from oil, as it experienced in 2015 when it’s contribution shrunk from 80 trilyon to by 40 trilyon. Uncertain of oil price prospect urge oil company to delay exploration activities, and prioritizing on maintenance on existing well. As a result, more oil service companies affected with dramatic drop on earning and employee lay off.
The same condition faced by mining industries, notably coal sector. Low demand from consumer, especially China, due to weak economy has led coal company to stop mining. Raw mineral export ban as an implementation of Mining and Coal Bill (UU Number 4, 2009) is another main factor exacerbating the condition. Mining company are advancing difficult stance, they must build a capital intensive smelter whereas they possess little cash flow due to export ban.
In conclusion, DGT is facing very hard external condition to afford tax target. Without an out of the box tax strategy, it is quite impossible to achieve 2016 tax target. On of the quickest strategy is what so called tax amnesty, and yet unfortunately parliament decided to put off the legislation until reses period.

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