VAT refunds reduce growth in January tax revenue

TAX - JAKARTA. The Finance Ministry has said that large repayments for overpaid value-added tax (VAT) in the manufacturing sector had reduced the tax revenue in January to Rp 86 trillion (US$6.10 billion).

Taxation Directorate General spokesman Hestu Yoga Saksama said on Thursday that gross tax revenue grew 11.49 percent in January to Rp 105.28 trillion, but the obligation to repay VAT overpayments had reduced growth to 8.82 percent year-on-year (yoy).

The tax office records showed that the manufacturing sector contributed about 20.8 percent of the total tax revenue, but this decreased in January to 16.2 percent, or Rp 16.77 trillion.

Meanwhile, refunds claimed for overpaid VAT grew 40.66 percent to Rp 16.4 trillion. “Tax revenue from the manufacturing sector grew negatively,” Hestu said.

Taxation Director General Robert Pakpahan confirmed that the decline in tax revenue from the manufacturing sector was due to a new government policy to immediately repay overpaid VAT, locally called restitusi PPN.

The Finance Ministry’s data shows that the palm oil industry made the largest contribution to the January tax revenue at Rp 3.6 trillion, followed by the metals industry (Rp 2.2 trillion), the mining industry (Rp 2 trillion), the paper industry (Rp 1.4 trillion) and then the automotive industry (Rp 1.3 trillion).

Tax revenue contributions from other sectors posted significant growth,  with the financial sector growing 33 percent to Rp 10.01 trillion, the warehousing sector 35.4 percent to Rp 4.69 trillion and the mining sector 175.7 percent to Rp 3.6 trillion.

Yustinus Prastowo of the Center for Indonesia Taxation Analysis (CITA) said the tax revenue performance in January did not reflect the annual performance of each sector.