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Big data to help government tighten screws on taxpayers

The tax authority is banking on big data analytics to help it further increase the number of taxpayers, as the state is already enjoying faster growth in revenue collection

The Jakarta Post
Jakarta
Tue, July 17, 2018

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Big data to help government tighten screws on taxpayers

T

he tax authority is banking on big data analytics to help it further increase the number of taxpayers, as the state is already enjoying faster growth in revenue collection.

The database on taxpayers has continuously grown since the Finance Ministry’s Tax Directorate General offered a tax amnesty last year and cut taxes for small and medium enterprises (SMEs).

The SME tax cut is expected to convince more small business owners to come clean about their tax status, which would eventually help the tax authority enlarge its database of taxpayers.

The tax office was confident the utilization of data was a powerful method to capture more potential taxpayers, said Tax Director General Robert Pakpahan.

“By cooperating with financial institutions and analyzing the data we get, we hope to obtain more information on potential taxpayers [who do not have a tax identification number],” he told The Jakarta Post on the sidelines of an event in Jakarta recently.

After developing it for two years, the big data system would be fully operational this year to help tax officers analyze the taxpayer database, said Iwan Djuniardi, the tax office’s director of information and communication technology transformation.

“Through big data, we can examine around 30,000 cases a week,” he said on Saturday. “It is much improved compared to the previous system [relational database management system/RDBMS], which allows only 100 to 200 cases to be examined within two years.”

However, the big data model currently developed by the tax authority was still limited to detecting tax fraud through the analysis of fictitious tax invoices, which often occurred in the country, Iwan said.

Iwan emphasized that the big data technology was not only intended to detect tax fraud but also help tax officers learn about the behavior of Indonesian citizens regarding taxation, so that the tax office could improve its services.

Iwan said the big data technology would be further developed, along with improving the level of competence among operators in data science.

The World Bank in 2016 estimated that the Indonesian government collected only half of its potential tax revenue, considering Indonesia’s low tax-to-gross deomestic product (GDP) ratio of 10.8 percent in 2015, from a total of 30 million registered taxpayers.

According to the tax office, the number of individual and institutional taxpayers reached 38.65 million in 2017, up 7 percent from a year earlier.

However, fewer than 66 percent of the targeted 16.5 million registered individual taxpayers filed their 2017 tax returns by the March 31 deadline.

According to tax office data, around 992,000 of the 10.6 million taxpayers who filed tax returns were self-employed professionals, such as doctors, consultants, lawyers and businesspeople. The other 9.6 million were paid employees who had tax deducted from their income by default.

The government is targeting Rp 1.42 quadrillion (US$98.77 billion) in tax revenue this year, a 10.6 percent increase from Rp 1.28 quadrillion targeted in 2017.

During the first half, the tax authority collected Rp 581.54 trillion in tax revenue, or 40.84 percent of the full-year target. The figure is slightly higher than that of the same period last year, when it collected 39 percent of its target.

Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo told the Post on Friday that he had been hoping for the implementation of a single identity number integrating the ID number and tax identification number (NPWP).

However, in the absence of regulation concerning this concept, he agreed the big data system could be beneficial in efforts to expand tax collection, particularly in the realm of informal businesses.

Prastowo said accuracy was the most important advantage of big data in preventing tax evasion. (sau/ris)

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