Jakarta - Finance Minister Sri Mulyani Indrawati has confirmed that there will be no increase in tax rates, despite a projected 13.5% rise in tax revenue targets for 2026, reaching Rp 2,357.7 trillion. The increase in state revenue from taxes is necessary to meet the government’s growing financial needs.

“In the media, it has been portrayed as if the effort to increase revenue means raising tax rates. In fact, tax rates remain the same, but enforcement and compliance will be improved and tightened,” said Sri Mulyani during a virtual working meeting with the Regional Representative Council (DPD) Committee IV on Tuesday, September 2, 2025.

Through stronger enforcement, taxpayers who are capable of paying taxes will continue to do so easily and in compliance with the rules. Meanwhile, those who are financially weak will be supported by the government.

One of the sectors receiving government support is Micro, Small, and Medium Enterprises (MSMEs). According to the Minister, MSMEs with an annual turnover below Rp 500 million will not be subject to income tax (PPh). “So they don’t pay any tax,” she said.

Meanwhile, MSMEs with a turnover between Rp 500 million and Rp 4.8 billion will be subject to a final income tax rate of 0.5%. This is part of the government's policy to support small businesses. Without such a special regulation, MSMEs would otherwise be subject to the standard corporate income tax rate of 22%.

“This shows that while we maintain healthy state revenues, we also ensure inclusivity and solidarity, especially for vulnerable groups,” she added.

In addition to MSMEs, the government will also continue exempting Value-Added Tax (VAT) on essential sectors such as health and education. “And for individuals earning less than Rp 60 million per year, no income tax will be imposed,” she explained.

Sri Mulyani also outlined that central government spending in 2026 is projected to reach Rp 3,136 trillion. This consists of Rp 1,498.3 trillion in ministry and agency (K/L) expenditures and Rp 1,638.2 trillion in non-K/L allocations.

Of the K/L allocation, Rp 564.2 trillion is designated for core government operational needs. This includes Rp 332.8 trillion for personnel expenditures and Rp 231.4 trillion for operational goods, defense spending, education costs, and support for institutional tasks and functions.

In terms of priority spending, the government plans to allocate Rp 934.1 trillion. This includes regular programs such as staple food subsidies and health insurance, amounting to Rp 162.4 trillion, as well as funding for the Free Nutritious Meals (MBG) program and other priority expenditures.

With improvements in the governance of non-tax state revenues (PNBP), service innovations, and stricter law enforcement, Sri Mulyani stated that the 2026 state budget deficit is projected at 2.48% of GDP. This target is set to keep the national debt-to-GDP ratio at around 39.96%, ensuring debt sustainability and maintaining fiscal space to respond to global economic dynamics.