Due to Coretax and New PPh 21 Formula, Early Year Tax Deposits Could Decrease

JAKARTA, KOMPAS — Tax revenues at the beginning of the year are expected to decline compared to the previous year due to various problems that emerged at the beginning of the year. With sluggish tax performance at the beginning of the year, the government is considered to have difficulty achieving the tax revenue target in 2025.

Several factors that hampered the rate of tax revenue in early 2025 were the new Coretax taxation system which is still problematic to this day, the increase in Value Added Tax (VAT) which was cancelled in general, and the impact of the implementation of the new average effective rate (TER) formula in collecting Personal Income Tax (PPh 21).

Center for Indonesia Taxation Analysis (CITA) researcher Fajry Akbar said that tax revenue in January 2025 will most likely contract or grow negatively on an annual basis (year on year). There are two major factors that he said are disrupting tax payments.

First, the operational risk of the Coretax system or Tax Administration Information System (SIAP) which has been in effect since January 1, 2025, but is not yet ready to be implemented. The system does not run smoothly so that many taxpayers have difficulty fulfilling their obligations, especially in paying and reporting VAT or PPh.

The system has been in effect for more than a month, but it is still facing various technical obstacles. Due to the system not being ready, in early February 2025 the government and the House of Representatives agreed to maintain the old tax system so as not to hinder the tax collection process.

Thus, currently there are two systems that apply in parallel, namely Coretax and the Directorate General of Taxes Information System (SIDJP) which has been used so far.

"Coretax was indeed designed as a game changer. Unfortunately, until now the system has become a problem rather than a solution. In terms of tax policy, the risk is very high," said Fajry when contacted in Jakarta, Wednesday (2/19/2025).

The second factor is the correction of PPh 21 receipts due to the TER mechanism implemented starting in 2024. As a result of the new mechanism, there is a difference in excess tax payments that must be returned to employee taxpayers. The return of the excess tax payment must be made no later than January 2025.

According to Fajry, the impact of the PPh 21 correction was only seen early this year because the administration of PPh 21 deductions in December was mostly only submitted and reported by companies in the following month, namely January 2025.

"We know that in the calculation of PPh 21 there is a calculation correction in December due to the TER mechanism. However, the payment is no later than the 15th of the following month in January. Therefore, it is likely that the impact on new revenues will be felt in January," said Fajry.

Reflecting on the sluggish performance at the beginning of the year, the government is considered to have difficulty achieving the 2025 tax target of Rp 2,189.3 trillion. Although tax revenue is predicted to continue to grow positively throughout the year, the achievement will be far from the target.

CITA's calculation, the government needs additional revenue of IDR 265 trillion compared to last year's revenue outlook to be able to meet the 2025 revenue target. That is a difficult figure to achieve considering that additional revenue in 2024 is only IDR 63.1 trillion. The amount is not much different from the average additional revenue pre-pandemic (2014-2019), which was IDR 68.62 trillion.

"For tax types, VAT and PPnBM (luxury goods tax) revenues will be the hardest to achieve the target, requiring at least an additional Rp116.62 trillion. If the previous VAT rate increase had been implemented, there would have been an additional Rp70 trillion-Rp80 trillion in revenue, it would still be possible to achieve the target. However, it is now difficult," said Fajry.

However, he assessed that Corporate Income Tax could still grow positively in 2025 compared to 2024. This is because the revenue base in 2024 is low due to the impact of commodity price moderation from 2022 to 2023.

"Corporate Income Tax will improve again, and could even grow positively. However, it is likely that this year we will still rely more on VAT revenue," he said.

The issue of declining tax revenue performance in early 2025 also emerged in the working meeting of Committee IV of the Regional Representative Council (DPD) with the ranks of the Ministry of Finance which was held behind closed doors at the Parliament Complex, Senayan, Jakarta, on Tuesday (18/2/2025).

In the meeting forum, Chairman of Committee IV DPD Ahmad Nawardi asked Minister of Finance Sri Mulyani Indrawati to explain about the decline in state revenue due to problems in the Coretax system. He questioned the information obtained that state revenue at the beginning of the year was only able to reach IDR 50 trillion, down far from the initial revenue in 2024 which reached IDR 172 trillion.

Information obtained by Nawardi, the plummeting tax payments were due to problems in Coretax. Tax invoices entered into the system were only able to reach 20 million invoices, a significant decrease compared to 60 million invoices in the same period last year.

However, Nawardi's question was not answered by the Ministry of Finance. "It has not been answered by Mrs. Sri Mulyani. Maybe she forgot because there were so many questions. Her time is also limited so I don't have enough time to go into more detail," said Nawardi.

He also asked the government to find new sources of revenue to cover the sluggish performance at the beginning of the year. "The digital tax system is good, but if this problem continues to occur, it must be fixed quickly. This means the government must find a solution to get revenue from other places," he said.

Contacted separately, the Directorate General of Taxes of the Ministry of Finance did not want to comment or disclose information regarding tax revenue data as of January 2025. Director of Counseling, Services, and Public Relations of the Directorate General of Taxes of the Ministry of Finance, Dwi Astuti, only answered, "The realization of tax revenues as of January 2025 will be conveyed directly by the Minister of Finance through the APBN Performance and Facts (KiTa) press conference which is routinely held every month."