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Tax Digitalization in Indonesia: Success Factors and Pathways Forward

SDGs Impacted

Over the past two decades, Indonesia has been working to modernize its tax system through a wide range of digitalization initiatives. These efforts have aimed to deliver benefits for both Indonesian taxpayers and for government authorities administering the tax system at all levels. Through its digitalization initiatives, Indonesia’s tax system has taken great strides forward, although not all tax initiatives have been successful. Key achievements are highlighted in this report, along with key lessons from Indonesia’s tax digitalization journey that could inform other countries’ reform efforts. This paper sets out pathways forward to help realize the full potential of digitalization, with specific and practical recommendations.

Impact / Outcome
Efficiency was improved, resulting in a 20% reduction in business tax compliance time between 2014 and 2019, and an average cost saving for businesses filing monthly tax returns of IDR 32 million or approximately USD 2,000 annually. User satisfaction with service, as measured by DGT’s 1-to-5 index (5 being highest) rose from 3.90 in 2011 to 4.27 in 2017. Significant improvement in the World Bank’s Ease of Doing Business Index: in the Paying Taxes category, in the decade to 2020 Indonesia rose 45 places, to 81st and rose 49 places, to 73rd, in the overall rankings.
Funding sources
Public
Key Metrics
Reduced administrative delays and improved efficiency through tax digitalization
Locations
ASEAN, Indonesia
Sector
Financial services
Intervention lever
Policy
Operating model
Public-private partnership
Year published
06 October 2020

The EDISON Alliance

A World Economic Forum Initiative