Govt Blames Restitution for Tax Revenue Decline

Tax revenue in the first quarter of 2024 declined by 8.8 percent YoY, with fiscal authorities blaming restitution as one of the causes.

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30 Apr 2024 - 16.31
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Govt Blames Restitution for Tax Revenue Decline

Illustration - Taxation.

Bisnis, JAKARTA — Restitution is often brought to attention whenever tax revenues plummet. However, restitution is a legal mechanism and the right of every taxpayer, and thus should not be demonized as a cause for the decline in state revenue.

In the first quarter of 2024, fiscal authorities once again used restitution as an excuse to distort facts about the current economic situation. To illustrate, tax revenue in the first quarter of 2024 amounted to IDR393.91 trillion, down 8.8 percent year-on-year (YoY) after restitution is taken into account.

The issue arises when the government compares it with gross tax performance, thus negating restitution, which still grew by 0.64 percent (YoY). Legally, restitution is the right of taxpayers in terms of income tax and value-added tax (VAT), which is applicable when the amount of tax paid is larger than the tax owed. 

Restitution in corporate income tax can also occur due to examination results or a tax dispute between the fiscal authority and the taxpayer. Meanwhile, VAT restitution usually occurs due to examination results when taxable entrepreneurs are deemed “low-risk” or categorized as “compliant” taxpayers. 

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