IMF: Indonesia needs 15% tax-to-GDP ratio

JAKARTA. The International Monetary Fund (IMF) has said that Indonesia and other Asian countries need to increase their tax-to-gross domestic product (GDP) ratio to 15 percent so they can accelerate economic growth.

However, IMF deputy managing director Mitsuhiro Furusawa said most Asian countries’ tax-to-GDP ratio was less than 15 percent.

“It is not enough to achieve the goal of many countries,” he said on the sideline of the International Taxation Conference in Jakarta on Thursday as reported by kontan.co.id.

He stressed the importance of increasing tax revenue by boosting the domestic economy, but acknowledged that each country faced tough competition in attracting investors.

Furusawa called on countries in Asia to cooperate in trying to attract investors to prevent unhealthy competition. He said the IMF was ready to facilitate countries in Asia to deal with the problem.

Meanwhile, Finance Minister Sri Mulyani said the government had set a tax-to-GDP-ratio target of 16 percent by 2019 from the current of 10.30 percent through various efforts. These include making financial information more transparent by joining the Automatic Exchange of Information (AEOI) and cooperating with other countries to fight tax evasion by multinational companies and rich people.

However, Furusawa expressed doubt that Indonesia’s tax-to-GDP ratio could grow 5 percent within two years. “It is an ambitious target. I hope you can achieve it. The most important is political will. We support your efforts,” he said.