Indonesia faces tax revenue shortfall and discusses cigarette legalization

Indonesia is facing potential challenges in meeting its 2026 State Budget targets. As of July 2026, tax revenue collection reached Rp1,209.6 trillion, representing only 51.31 percent of the Rp2,537.7 trillion annual goal. Director-General of Taxes Bimo Wijayanto noted that while revenue grew by 12 percent, a shortfall of approximately Rp46.9 trillion is still projected by year-end. To mitigate this, the government is focusing on expanding the tax base through the Core Tax Administration System, which has added 2 million new taxpayers.

In a related effort to stabilize revenue and compliance, the Ministry of Finance is discussing a scheme to legalize illegal cigarette manufacturers. Director-General of Customs and Excise Djaka Budi Utama stated that the goal is to encourage illegal operators to register for official business numbers (NPPBKC) and comply with state regulations. This plan, currently being coordinated with the House of Representatives, aims to transition illicit businesses into the formal economy. Meanwhile, customs officials continue to combat fraud, including the detection of counterfeit excise stamps used to bypass legal tariffs.