The Indonesian Government estimates that tax expenditures will reach IDR 632 trillion in 2027, an increase of approximately 9.6% compared with the 2026 projection of IDR 576.4 trillion.
Tax expenditures are one of the fiscal policy instruments used by the government to support national development objectives while maintaining economic growth momentum.
Of the total amount, five business sectors are expected to receive the largest share of tax expenditure benefits in 2027.
1. Manufacturing – IDR 166.1 Trillion
The manufacturing sector is expected to receive the largest amount of tax expenditures in 2027.
The government estimates that this sector will receive IDR 166.1 trillion, equivalent to approximately 26.2% of total tax expenditures in 2027.
The significant amount of tax benefits in this sector comes, among other things, from incentives utilized by businesses with annual turnover below IDR 4.8 billion, as well as facilities such as import duty exemptions for capital goods and activities in free trade zones.
2. Agriculture, Forestry, and Fisheries – IDR 70.7 Trillion
The agriculture, forestry, and fisheries sector ranks second.
In 2027, this sector is estimated to receive IDR 70.7 trillion in tax expenditures, equivalent to approximately 11.2% of total tax expenditures for the year.
3. Trade – IDR 66.5 Trillion
The trade sector is also projected to receive a significant amount of tax expenditure.
The estimated amount is IDR 66.5 trillion, representing approximately 10.5% of total tax expenditures in 2027.
4. Other Services – IDR 62.4 Trillion
The other services sector is projected to receive IDR 62.4 trillion in tax expenditures.
This amount represents approximately 9.9% of total tax expenditures in 2027.
5. Financial Services and Insurance – IDR 58.5 Trillion
The financial services and insurance sector ranks fifth, with estimated tax expenditures of IDR 58.5 trillion.
This represents approximately 9.3% of total tax expenditures in 2027.
The 5 Sectors Receiving the Largest Tax Expenditures in 2027
In summary, the five sectors expected to receive the largest tax expenditures are:
- Manufacturing: IDR 166.1 trillion (26.2%)
- Agriculture, forestry, and fisheries: IDR 70.7 trillion (11.2%)
- Trade: IDR 66.5 trillion (10.5%)
- Other services: IDR 62.4 trillion (9.9%)
- Financial services and insurance: IDR 58.5 trillion (9.3%)
What Does This Mean for Businesses?
In simple terms, the government expects to provide more tax incentives and facilities in 2027, with the manufacturing sector projected to be the largest beneficiary.
These measures are intended to encourage business activity and maintain economic growth. For businesses, developments in tax expenditures are important to monitor, as available tax incentives and facilities may become one of the factors to consider when planning and managing corporate tax obligations.