Reproducibility package for Tax Policy Review in Indonesia: Corporate Income Tax, Alternative Final Tax, and Value-Added Tax

Approximately two-thirds of Indonesia's tax revenue is derived from business income and value-added taxes, however, these collections still fall short of their full potential. To better understand weaknesses in the design and implementation of these taxes and ultimately address the shortfall in their revenue mobilization, an in-depth analysis of each tax is essential. This paper examines the policy framework of the corporate income tax (CIT); the alternative final tax (AFT) for micro, small, and medium enterprises; and the value-added tax (VAT). It identifies key policy gaps that have undermined revenue potential–including high eligibility thresholds and generous exemptions that narrow the tax base. The presence of multiple tax rates also complicates the tax system and increases the compliance burden. To improve tax revenue, the administration should consider lowering the eligibility threshold, eliminating special tax treatments, and simplifying tax schemes.