Indonesia overhauls Coretax digital tax system to increase state revenue

Indonesian Finance Minister Purbaya Yudhi Sadewa pledged to swiftly fix the country’s troubled digital taxation platform, Coretax, after months of technical glitches hindered collections.

He promised the system would run smoothly within a month, even if it required bringing in foreign IT experts.

The pledges were made at a press conference on Monday in Jakarta. Minister Purbaya also said the government could consider establishing a State Revenue Agency (BPN) if efforts to optimise revenue from taxes and customs duties fail to meet targets.

Coretax was launched in early 2025 with the aim of streamlining tax administration. But the system has faced repeated malfunctions, drawing criticism from businesses and taxpayers.

The Asian Development Bank (ADB) has earmarked part of a $500 million policy-based loan to help improve Coretax and support wider fiscal reforms.

As of August 31, the government's tax revenues had fallen 3.6%, reaching IDR1,330.4 trillion (around $86.2 billion), or 55.7% of the 2025 state budget outlook.

At the press conference, Minister Purbaya stressed that tax rates will not be raised, instead, economic growth will be encouraged to boost revenue naturally.

Indonesia is targeting IDR3,147.7 trillion ($195 billion) in state revenue next year, of which IDR2,357.7 trillion will come from taxes, a 13.5% increase from this year’s outlook.

The government says the higher target will not require new levies but instead rely on improved compliance and digital platforms like Coretax.

Strengthening Coretax is also part of a broader push to lift Indonesia’s tax-to-GDP ratio, which stood at just 12% in 2023, among the lowest in Asia and well below the OECD average of 33.9%.

ADB estimates suggest that tax reforms, including a fully functional Coretax, could add 1.28 percentage points to the ratio by 2030.