Indonesia: Tax Harmonization Law

In brief

On 7 October 2021, the Indonesian House of Representatives (DPR) passed the Tax Regulation Harmonization Law, known as the HPP Law. The President of Indonesia signed the HPP Law on 29 October 2021 as Law No. 7 Year 2021. The HPP Law will enhance Indonesian fiscal policy with the aim of accelerating economic recovery in hand with tax reform that will come into effect in 2022 that is expected to lead to an increased tax ratio and better tax compliance.

The HPP Law provides changes to the current tax laws, and introduces provisions on a Voluntary Disclosure Program (VDP) and a Carbon Tax. The introduction of the Carbon Tax shows the government is making efforts to support a green economy to reduce the world's carbon emissions and mitigate climate change. Meanwhile, the VDP includes two schemes for the disclosure of taxpayers' assets. The program will run from 1 January 2022 to 30 June 2022.


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