Tax consultant from Botax Consulting Raden Agus Suparman projects that there is Rp7.53 billion in potential lost taxes with the number of layoffs reaching 18,610 people by February 2025.

Raden based this projection on the assumption that the average monthly salary of employees affected by layoffs is IDR 6 million, so the Income Tax (PPh) Article 21 based on the Average Effective Rate (TER) formula is IDR 45,000 per employee.

Thus, the potential lost tax is approximately Rp837.45 million per month. If this situation continues until December 2025, the figure will reach Rp7.53 billion.

"The layoffs of 18,610 employees will certainly impact tax revenue. Before the layoffs, the state received Article 21 Income Tax withheld by the company. After the layoffs, the company no longer receives Article 21 Income Tax," Raden told the Jakarta Post. Bloomberg Technoz , Friday (28/3/2025).

Raden emphasized that the potential for lost taxes would be even greater if it turned out that the salaries given to employees were larger.

In addition to Article 21 Income Tax, layoffs will also reduce corporate income tax and Value Added Tax (VAT) revenues. This occurs because the economies of scale of companies conducting layoffs are reduced.

Economies of scale, on the other hand, refer to a company's gross sales or turnover. A decrease in gross turnover means a decrease in net income. Consequently, this will impact the corporate income tax paid by the company.

"The biggest impact of the decline is probably VAT. VAT is a tax collected on every sales transaction. If sales decrease, the VAT collected will automatically decrease as well," he said.

The Ministry of Manpower recorded 18,610 workers affected by layoffs reported throughout January-February 2025.

State revenue realization as of February 2025 was recorded at IDR 316.9 trillion. This figure represents a decrease of IDR 83.46 trillion, or 20.84%, compared to IDR 400.36 trillion in February 2024.

Finance Minister Sri Mulyani Indrawati stated that the realization of state revenue consisted of tax revenue of Rp240.4 trillion, a decrease of Rp79.6 trillion or 24.8% compared to tax revenue in the same period last year of Rp320 trillion.

"This tax revenue includes tax revenue in February 2025, which amounted to IDR 187.8 trillion," said Sri Mulyani at the February 2025 State Budget Performance and Facts Press Conference, Thursday (March 13, 2025).

Tax revenues fell by Rp81.22 trillion, or 30.19%, compared to the Rp269.02 trillion realized in February 2024. Meanwhile, customs and excise revenues reached Rp52.6 trillion, a slight decrease of 2.13% from Rp51.5 trillion.

"Then, the realization of non-tax state revenue (PNBP) was IDR 76.4 trillion," said Sri Mulyani.

For the record, the tax revenue target in the 2025 State Budget is set at Rp2,490.9 trillion. This represents a Rp181.1 million increase, or 7.84%, compared to the Rp2,309.8 trillion in the 2024 State Budget.

Source: Bloomberg

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