By: Ardi Wirdana
Following the launch of the e-billing system in January, the Indonesia tax office is working on yet another tech innovation to help increase tax revenue in a bid to reach ambitious tax targets set by the administration of President Joko Widodo .
Unlike e-Billing, which is an online application for taxpayers, the latest innovation is designed for tax officers to help them in their pursuit of unregistered and non-compliant businesses.
The new application will take the form of a smart phone application, or app, which uses geotagging technology to map businesses. The application will work in nearly the same way as Waze, but instead of providing traffic information, users will be able to locate businesses and tag them, upload photos and mark them as points of interest on a map.
Users will be able to identify businesses that already have a tax registration number and those that have not, by marking them with different coloured point of interest icons. The information on the app can be accessed by other agents to be followed up later.
Currently, the Indonesia tax office has already added around 440,000 businesses in the country to the app and is planning to complete the process for the entire country by April this year.
The Tax Directorate General says that such technological assistance will be vital for the lean tax office to improve its productivity.
According to a report by tempo.co, the tax office currently has a total manpower of 33,000 people and is still 95,000 short of the ideal number of officers to handle the huge number of registered taxpayers in Indonesia, which in 2014 reached 26.8 million people, according to the tax office.
“We are making the most of the data with the available resources, even though we are short of inspectors. This is what you call extensification which will have an impact on tax intensification,” Awan Nurmawan Nuh, a director at the Finance Ministry’s directorate general of taxation, said as quoted by kompas.com.
Championing electronic systems
The app follows a number of other technological innovation by the tax office since Joko Widodo became president and significantly upped tax revenue targets.
The government has been determined to slowly move away from conventional methods of public services towards more convenient and practical electronic-based services, especially when it comes to tax-related services.
E-billing was the government’s most recent electronic initiative in the tax field prior to the location tax app. As its name suggests, the e-Billing system is an online payment system that allows Indonesian taxpayers to pay their bills anywhere, anytime, sending the data straight to the tax office. This contrasts with the old manual method which required taxpayers to keep records and pay taxes through commercial lenders.
This system was preceded by a similar programs last year called the e-filing and e-SPT, which new online ways to submit Tax Return or Tax Return Extension electronically real time via the tax office website.
The spirit of tech innovation in tax services has even spread to the private sector. Tech company Achilles Advanced System has launched Online Pajak, a web-based tax reporting application.
The initiative has been officially approved by finance ministry to digitally submit tax returns to the tax office. Since its introduction in 2014, OnlinePajak has served 60,000 clients and aims to cater to 100,000 taxpayers by the end of this year.
Though the technological breakthroughs have been impressive, their impact on tax collection is still open to debate. Some argue that the lack of dissemination of the application has rendered them ineffective.
The electronic tax filing system or e-filing, for instance, is said to still alienate tax payers. Many still prefer to stick with the conventional paper forms, despite the numerous pages and long queues, as they are not familiar with the new online system.
Indonesia tax amnesty policy
While the new tech innovations do wonders in simplifying the tax-paying experience of taxpayers, it does very little to expand the Indonesia tax base, which is vital in order to achieve the huge tax revenue target set by the government.
One of the initiatives the government is counting on to drastically increase tax revenue is the tax amnesty policy. The policy, which frees taxpayers from fines on any back taxes incurred by hidden assets abroad, is expected to earn the government an estimate of US$ 4.4 billion in unpaid taxes from tax evaders.
However, to the government’s dismay, this policy has been put on hold, after lawmakers recently decided to delay the deliberations on the Indonesia tax amnesty bill.
Officials say that the delay has put pressure on the government’s finances and may force it to cut spending in 2016.
The Indonesian government aims to collect Rp 1,546.66 trillion (US$ 117.50 billion) in tax revenue (including customs and excise tax) in the 2016 state budget. This is 24.69 percent higher than the Rp 1,240.4 trillion realisation last year.