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Government Confident in Meeting Tax Target, Prepares to End EV Incentives and Faces Global Minimum Tax Dilemma

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Government Confident in Meeting Tax Target, Prepares to End EV Incentives and Faces Global Minimum Tax Dilemma
Indonesia’s economic and tax policy landscape continues to adapt to both domestic and global challenges. This report highlights several key issues, ranging from fiscal policy adjustments in the automotive and creative industries to the government’s commitment to meeting its ambitious tax revenue target.

The Indonesian government is taking strategic steps to manage fiscal policy and drive economic growth, marked by both optimism and challenges. Finance Minister Purbaya Yudhi Sadewa expressed confidence that the Rp2,076 trillion tax revenue target will be achieved. This optimism aligns with the government’s efforts to optimize state revenues, including the official termination of import duty exemptions for electric vehicles at the end of this year. The move aims to stimulate the local automotive industry and boost domestic content requirements (TKDN).

At the same time, the government faces a major dilemma regarding the Global Minimum Tax (GMT). While the 15% minimum tax has the potential to raise state revenues, concerns remain that it could weaken Indonesia’s competitiveness in the eyes of foreign investors. Economists have urged the government to redesign tax incentives—such as replacing tax holidays with alternative forms of incentives that remain compliant with GMT rules—to maintain investment attractiveness.

In addition, the government is focusing on strengthening the creative industry. The Minister of Creative Economy emphasized the importance of implementing a usage-based music royalty system to ensure fairer payments for musicians and songwriters. Overall, the government is striving to strike a balance between international commitments, domestic industry protection, and support for strategic sectors in order to meet its ambitious fiscal targets.

These policy measures reflect an integrated government strategy. The termination of import duty exemptions for EVs demonstrates the use of fiscal tools to support domestic industries. On the other hand, the GMT dilemma highlights the challenge of balancing global commitments with investment competitiveness. Economists suggest that innovative incentive schemes will be key to overcoming this issue. At the same time, the government’s push to strengthen the creative industry through a fairer royalty system underscores its broader approach. Despite the challenges, officials remain optimistic about achieving the tax revenue target.

Indonesia’s current tax policy stands at a complex crossroads. The government must carefully navigate global challenges, such as the Global Minimum Tax, without compromising competitiveness. Transparent and adaptive policy implementation will be crucial to ensuring that revenue targets are met, investment flows remain steady, and economic growth momentum is sustained.



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