Indonesia Targets Shadow Economy to Boost 2026 Tax revenue
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Jakarta -โ The Indonesian government is launching a strategic initiative to aggressively taxโ economic activities currentlyโ operating outside โขformal channels – often โคreferred to โasโฃ theโ “shadow economy.” This intensified โฃeffort, slated โto begin in 2026, aims toโ bolster state revenue without increasing existingโ tax rates.
What is โthe Shadow Economy?
The Directorate General of Tax (DGT) defines the shadow economy as economic activity deliberately concealed from authorities to avoid taxation. it’s โคalso โknown as theโ black or โunderground economy. This hidden economic activity represents a significant loss of potential revenueโฃ for the government.
Finance Minister โฃSri Mulyani โขIndrawati emphasized the โคimportance of addressing the shadow economy during a recent press conference regarding the 2026 state budget. This โis actually also related to the Shadow Economy and there are alsoโ many illegal activities,
she stated on August 19, 2026.
Targeted Sectors
The government has identified several key sectors with a โhigh prevalenceโข of shadow economic activity. These include:
- Retail Trade
- Food and beverage
- Gold โTrade
- Fisheries
These sectors will be subject to โฃincreased scrutiny andโ enforcement measuresโข to ensure tax compliance. โ But what specific strategies will be employed to โคbring these businesses into the โขformal economy?
Government Initiatives
Since 2025, the government has beenโฃ proactively preparingโค for this initiative. Key steps include:
- Conducting studies to measureโ and map the extent of the shadow โคeconomy โin โIndonesia.
- Developing aโฃ Commitment โImprovement Program (CIP) specifically focused on the shadow economy.
- utilizing intelligence analysis to identifyโค and address high-risk taxpayers.
The governmentโข will also โฃconduct intelligence studies to further explore the potential scope of โขthe shadow economy.
Did You Know? The shadowโฃ economy is estimated to representโ aโ ample portion ofโฃ globalโฃ economic output, varying โconsiderablyโ by country and region. โaccording to a 2018 study by the International Monetary Fund (IMF โWorking Paper), the โฃsize of the shadow economy can range from 10% to over โค70% ofโข a country’s GDP.
technological Advancements in Tax Enforcement
Several technological advancementsโ are being implemented to โฃimprove tax collection and reduce the shadow โeconomy:
- NIK-NPWP Integration: The integration of the Population โคIdentification Number (NIK) with the taxpayer Identification โNumber (NPWP) became effective Januaryโค 1, 2025, through the Coreโ tax Administration System (CTAS).
- Digital VAT Collection: The government has appointed foreign entities to collect Value Added Tax โฃ(VAT) on โฃtransactions involving digital products and servicesโ (PMSE).
- CTAS Implementation: Ongoing improvements โto the tax service โsystem through the implementation of โCoretax โคor CTAS.
- Data Matching: โ Matching โdata from digital platforms with existing fiscal โrecords to identify and address non-compliant businesses.
Pro Tip: Businesses operating in the targeted sectors should proactively review their tax compliance procedures and ensure accurate reporting to avoid potential penalties.
Keyโ Dataโ & Timeline
| Initiative | timeline |
|---|---|
| Shadowโฃ Economy Measurement Study | Began 2025 |
| NIK-NPWP Integration | Effective January 1, โ2025 |
| Intensified Tax Enforcement | Beginningโค 2026 |
| 2026 Tax Revenue Target | rp 2,357.71 trillion |
Looking โAhead
The Indonesianโ government’s commitment to โฃtackling the shadow โขeconomy signals โa significant shift in โฃtax enforcement. By leveraging technology, data analysis, and targetedโ enforcement, the governmentโค aims to create a more equitable and transparent โคtax โsystem. Will these measures be enough to significantlyโ reduce the size of โขthe shadow economy, and what impact will thisโ have on small businesses?
<รณmico
The issue of theโค shadow economyโ is a global challenge, particularly in developing nations.Factors contributing to its growth โinclude complex tax regulations,โค weak โenforcement, and a lack of trust in government institutions. Addressing โฃthe shadow economy requires a multi-faceted approach that combinesโ regulatoryโ reforms, technological innovation, and public awareness campaigns.Frequently Asked Questions aboutโข Indonesia’s Shadow economy Initiative
We hope this article โขprovided valuable insightโข into Indonesia’s efforts to addressโค its shadow economy. If you โฃfound โฃthis data helpful,โ please share it with yourโ network! We’re always eager to hear your thoughts – feel free to leave a โcomment below or โฃsubscribe โฃto our newsletter for moreโ in-depth analysis.
