Indonesia's Tax Directorate Warns of Revenue Loss from Free Nutrition Program

Indonesia's Directorate General of Taxes (Ditjen Pajak) under the Ministry of Finance has raised concerns about potential loss of state revenue stemming from the implementation of the Free Nutritious Meals program (Makan Bergizi Gratis or MBG). Director General of Taxes Bimo Wijayanto highlighted inconsistencies in the application of tax policy regarding funds distributed to nutrition service units (SPPG) or MBG kitchens. The issue originates from a circular issued by a previous head of the National Nutrition Agency (Badan Gizi Nasional) that exempted all MBG grants from taxation. However, Wijayanto emphasized that determining whether goods or income constitute taxable or non-taxable objects should be established through law and its implementing regulations, not administrative circulars.

Wijayanto made these remarks during a Ministry of Finance Corporate Open Class seminar held on June 18, 2026. He acknowledged the inherent risks and challenges in overseeing government priority programs, noting that such policy misalignments could result in significant financial impacts. The Directorate General of Taxes' concern reflects a broader tension between implementing government social programs efficiently and maintaining proper tax administration principles.

The tax authority's position suggests that the blanket tax exemption granted through the circular may not have proper legal foundation, potentially creating a precedent for other programs and undermining the tax system's consistency. Officials are expected to clarify the appropriate tax treatment of MBG program funds to ensure compliance with existing tax laws and regulations while maintaining the program's operational effectiveness.