National Tax Day in Indonesia Date in the current year: July 14, 2024

The history of taxation in Indonesia dates back to pre-colonial times, when Indonesia consisted of Muslim sultanates; each sultan collected taxes from his subjects. In the Dutch East Indies, taxes were collected by the colonial authorities. The Dutch government introduced a modern tax system in its overseas possessions in the 19th century and established the Directorate General of Taxes in the Dutch East Indies in 1924.

When the defeat of Japan in World War II became inevitable, the Japanese occupational authorities in the Dutch East Indies established the Investigating Committee for Preparatory Work for Independence (Badan Penyelidik Usaha-usaha Persiapan Kemerdekaan Indonesia, BPUPK) for Java. Among its members were the future president Sukarno and vice-president Mohammad Hatta.

The BPUPK had two plenary sessions, on May 28 – June 1, 1945 and on July 10-17, 1945. The first session was dedicated to general matters, whereas the second session was dedicated to fundamental issues relating to the new nation, including its constitution.

During one of the meetings of the subcommittee responsible for drafting the constitution, Rajiman Wediodiningrat proposed several edits, one of which stated, “Tax collection must be regulated by law”. The word “tax” was added to the second draft of the constitution that was submitted on July 14, 1945 (Article 23A, “All taxes and other levies of compelling character for the purposes of the state are regulated by law”). The anniversary of this event is now celebrated as National Tax Day.

Following the surrender of Japan and the proclamation of Indonesia’s independence, the Ministry of Finance was officially established in the new government, and the Directorate General of Taxes (Direktorat Jenderal Pajak, DJP) resumed operations under the newly created ministry. The DJP formulates and implements taxation policies, as well as norms, standards and procedures in the area of taxation, provides technical guidance and supervision within its jurisdiction, and performs monitoring, evaluation, and reporting functions.

Taxation in Indonesia is based on Article 23A of the Indonesian Constitution and taxation laws. The major taxes that exist in Indonesia include personal income tax, corporate income tax, property tax, goods and services tax (value-added tax), land and constructions tax, passenger vehicle tax, and carbon tax. Many of the taxes in Indonesia are progressive, and poor citizens are exempt from most taxes (the tax-free poverty line depends on the region).

National Tax Day was established to highlight the importance of taxation for the country’s economy and the contribution of all professionals working for the Directorate General of Taxes. Like most professional holidays in Indonesia, it is not a non-working holiday unless it falls on a weekend.