The government targets a 10% increase in VAT and luxury goods tax revenue.

The Indonesian government targets Rp 552.3 trillion in revenue from Value Added Tax (VAT) and Luxury Goods Sales Tax (PPnBM) in the 2022 State Budget Draft (RAPBN). This figure represents a 10.07% increase from the 2021 outlook.

This target for VAT and PPnBM revenue accounts for 37.65% of total tax revenue of Rp 1,466.84 trillion, or 36.65% of total tax revenue of Rp 1,506.92 trillion.

The VAT and PPnBM target in the 2022 RAPBN is supported by increased economic activity, fueled by efforts to recover the national economy from the impact of the Covid-19 pandemic since 2020. The increase is also supported by improvements in tax administration, including the development of online tax facilities (e-services).

The target for VAT and PPnBM revenue is the second-largest tax revenue source after Non-oil and Gas Income Tax, which is targeted at Rp 633.56 trillion in 2022.

During the Covid-19 pandemic, state revenue from VAT and PPnBM shrank by 15.28% to Rp 450.33 trillion in 2020, compared to Rp 531.58 trillion in the previous year. Restrictions on public activity during the pandemic and a decline in public spending on imported goods caused VAT and PPnBM revenue to fall sharply last year. This decline was the deepest compared to previous years.