Government Prepares Tax Incentives Worth Around Rp632 Trillion for 2027

Jakarta: The Indonesian government is preparing tax incentives worth around Rp632 trillion for 2027 through various tax relief measures and exemptions aimed at supporting economic activity.

Finance Minister Suahasil Nazara said the government deliberately forgoes some potential tax revenue that would otherwise be collected under prevailing regulations to provide incentives for individuals and businesses.

"How much in total tax exemptions have we given? For next year, it is around Rp632 trillion," Suahasil said at the National Leadership Meeting (Rapimnas) of the Indonesian Chamber of Commerce and Industry (Kadin), as quoted on Sunday (Nov. 1, 2026).

He stressed that tax policy is not merely a tool for generating state revenue but can also serve as an instrument to stimulate economic activity through incentives.

"This is a form of tax support. So taxes are not just about collecting money, but also about giving incentives to the economy," he said. List of Tax Incentives One of the tax facilities provided by the government is a final income tax rate of 0.5% for taxpayers with annual gross revenue of up to Rp4.8 billion. For individual taxpayers, annual business turnover of up to Rp500 million is exempt from income tax.

The government also provides value-added tax (VAT) exemptions, including for housing purchased by low-income households and certain goods and services.

The manufacturing sector is among the beneficiaries of government tax incentives. These include tax holidays, effective VAT rate facilities and income tax exemptions on dividends.

In addition to manufacturing, tax incentives are also provided to the public transportation, education, healthcare and construction sectors.

The planned tax incentives for 2027 are higher than the estimated Rp576.4 trillion allocated for 2026, equivalent to 2.24% of gross domestic product (GDP). This represents an increase of approximately Rp55.6 trillion in tax expenditure compared with the 2026 estimate.

The government uses these tax facilities as fiscal instruments to support economic activity and maintain people's purchasing power. (Yaumil Tianri Rahmi)

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