Regulations need to be stronger, and their implementation needs to be simpler, to bring more small- and medium-sized enterprises (SMEs) into Indonesia’s tax system.

SMEs are an important and growing segment of Indonesia’s economy but they are under-represented when it comes to paying tax. In 2015, SMEs accounted for 60% of the country’s gross domestic product.

The SME sector has been growing fast because the use of information technology and the promotion of creative industries have been adapted to local characteristics. Significant SME growth has taken place in fashion, food, advertising, interior design, and software development.

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https://www.adb.org/publications/tax-and-development-challenges-in-asia-pacific

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About the authors

Wawan Juswanto was special advisor to the dean of ADBI and a senior economist in the Capacity Building and Training Department of ADBI at the time the book was written.

Milson Febriyadi is a fiscal analyst in the Fiscal Policy Agency of the Ministry of Finance in Indonesia.

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