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Indonesia: Tax revenue down 5 percent as COVID-19 hits businesses
National tax revenue has fallen by 5 percent to Rp 152.9 trillion (US$9.62 billion) as of February compared to the same period last year as corporate income was severely hit by an economic slowdown blamed largely on the COVID-19 pandemic.
Finance Minister Sri Mulyani Indrawati said the decline in tax collection was mainly caused by a slump in import activities, lower global oil prices and weakening overall businesses performance in light of the spread of the novel coronavirus.
“We see corporate tax declined in February this year, which means corporate performance dropped significantly,” Sri Mulyani told reporters at the monthly state budget briefing on Wednesday.
According to the ministry, various tax sources declined sharply in the first two months of this year, with corporate income tax having fallen 19.57 percent to Rp 20.2 trillion and import tax down 10.63 percent at Rp 8.01 trillion compared with the corresponding period of last year.
However, individual income tax grew by 4.39 percent year-on-year (yoy) to Rp 25.56 trillion, while domestic value-added tax grew by 4.81 percent yoy to Rp 30.64 trillion as of February.
Overall tax collection in the first two months reached 9.3 percent of the full-year target of Rp 1.64 quadrillion in 2020.
The country booked a state budget deficit of Rp 62.8 trillion as of February at a time when it needs ample room to cushion economic shocks from the COVID-19 pandemic that has taken a toll on economic activity worldwide.
The total state revenue collected up to late February amounts to Rp 216.6 trillion, marking 0.5 percent yoy contraction, while spending increased by 2.8 percent to Rp 279.4 trillion.
The finance minister said the virus had weighed heavily on the global economy and Indonesia, adding that the assumptions underpinning the 2020 budget had changed due to the pandemic.
“There was a hope that economic growth could improve this year, but COVID-19 has affected economic activity, and now we are alert of its impact on the state budget,” Sri Mulyani told reporters.
Sri Mulyani previously said the budget deficit may widen to around 2.2 percent to 2.5 percent of GDP this year, with the forecast having taken into account big-check government stimulus to fuel the economy amid the COVID-19 pandemic.
The government unveiled new stimulus efforts to the tune of Rp 27 trillion for ministries and regional administrations to combat the virus.
The new measures come after two earlier stimulus packages. The first one, announced on Feb. 25, was worth Rp 10.3 trillion and included subsidies for mortgages and staple goods for low-income families as well as fiscal incentives for travel-related industries. The second package, worth Rp 22.9 trillion, includes individual and corporate tax breaks, among other measures.
Source: https://www.thejakartapost.com/news/2020/03/19/tax-revenue-down-5-percent-as-covid-19-hits-businesses.html