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Indonesian Finance Ministry plans to implement new core tax system in 2024
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(Courtesy of Finance Ministry)
T
axes play a vital role in the Indonesian national budget (APBN), contributing significantly to state revenues and supporting the development and welfare of the Indonesian population. In 2024, it is projected that tax revenue will reach approximately Rp 2309.9 trillion, representing an increase from the 2023 APBN target of Rp 2021.2 trillion.
For 2024, the new tax policy is oriented toward supporting economic transformation amid various challenges. This coming year, the Ministry of Finance through the Directorate General of Taxes will implement a tax system that is equivalent to developed countries; the Core Tax Administration System (SIAP) or better known as the Core Tax Administration System (CTAS).
One of the key strategies to achieve the revenue targets is the continuation of the ongoing tax reform process. This reformation journey began in 1983 when the official assessment system shifted to self-assessment. Over the years, continuous improvements have been made, encompassing both administrative and regulatory dimensions.
Currently, the Taxation Directorate General (DJP) under the Finance Ministry is actively implementing Tax Reform Volume III, which was initiated in 2016. Designed to optimize tax revenue, this reform is underpinned by the following five pillars; bolstering organizational capacity, elevating the quality of human resources, refining business processes, modernizing information systems and databases and enhancing regulatory frameworks.
The tangible outcomes of these reforms are reflected in legislation such as the Job Creation Law and Tax Regulation Harmonization (UU HPP). Through these legal changes, the DJP has refined various tax regulations, including the integration of the Single Identity Number and Taxpayer Identity Number (NIK, NPWP), the expansion of personal income tax brackets and tax exemptions for micro, small and medium-sized enterprises (SMEs).
The DJP has also revamped natural resource taxation, adjusted Value Added Tax (VAT) rates, regulated VAT in Electronic Commerce, introduced carbon taxes and launched the Voluntary Disclosure Program. While in terms of supervision, the DJP has undertaken a reorganization by establishing new Medium Tax Service Offices (KPP Madya) and Tax Service Offices (KPP Pratama), that are strategically and territorially focused.
Meant to be a dynamic organization that continually evolves, the DJP can adapt to the changing times and continually strives for self-improvement. With their changes and enhancements hoped to collectively create proper tax reform.
Director of Tax Dissemination, Services, and Public Relations DJP, Dwi Astuti emphasized that this tax reform is executed comprehensively, addressing both internal and external facets.
"We are actively working on this through the 10 business directions within the Core Tax Administration System (CTAS). These business directions encompass digitized and automated processes, data-driven knowledge systems, risk-based compliance approaches and omnichannel and borderless service offerings," Dwi explained.
With this tax reform, Dwi was confident that the DJP is one of the most advanced and modern government institutions in terms of leveraging information technology to meet contemporary demands. The DJP's interaction with taxpayers emphasizes the 3C approach (Click, Call, Counter), and underscores its alignment with the evolution of information technology.
Furthermore, the tax education website, although not new, has been enhanced to provide a more user-friendly and informative experience for taxpayers. It encompasses six primary education program modules, which cover tax awareness inclusion, the Renjani application, a dedicated tax learning space, educational outreach initiatives, access to the DJP library and business development service (BDS) modules. Additionally, there is an ongoing effort to develop a new module for early childhood education.
One of the pivotal modules set to launch today is the Renjani application, which serves as a digital platform for tax volunteers who will assist the DJP in educating both current and potential taxpayers. This application will also provide specialized training for tax volunteers.
The launch today also introduces the DJP's live chat service, which relies on a virtual assistant driven by artificial intelligence (AI), accessible through www.pajak.go.id. This virtual assistant, known as Fiska and Fisko, is available around the clock and can provide information on various tax-related matters. These virtual assistants can be used to access different types of information, such as the user’s NPWP, the Electronic Filing Identification Number (EFIN), the reporting of notice letters and the integration of the NIK with the NPWP.
Specifically for SME taxpayers, the DJP has created a dedicated SME chatbot. This chatbot offers online tax information services to SMEs via WhatsApp through the following mobile number, 08115615008, providing automated assistance without the need for an intermediary. Through this chatbot and live chat at pajak.go.id, the DJP can cover over 600 DJP administrative services.
Moving forward, the role of taxation is set to become increasingly strategic in supporting government policies amid these challenging national and global conditions. Taxation plays a pivotal role in ensuring a continuous stream of funding to help Indonesia maintain its status as an upper-middle-income country, with aspirations of transitioning to a high-income nation.
Although Indonesia has not yet reached high-income status, the DJP, under the Finance Ministry, has implemented significant changes to enhance services for taxpayers and the public. One such enhancement is the feature to submit EFIN requests through the M-Pajak smartphone app.
Moreover, the Finance Ministry has also introduced several policies to streamline tax processes, which includes expediting tax refunds for specific taxpayers based on trust and verification principles alongside the implementation of more equitable regulations for both employers and income earners, particularly concerning natural resources.
The implementation of CTAS will have far-reaching implications, not only for technology but also for all aspects of tax reform. Ihsan underscored the indispensable role played by DJP employees in the success of tax reform and extended an invitation to the public to actively participate in overseeing the ongoing reforms for the greater benefit of Indonesia.
International organizations also play a pivotal role in this process. The DJP has drawn valuable insights from organizations such as the Organization for Economic Cooperation and Development (OECD), the Australian Taxation Office (ATO), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the Internationaal Belasting Documentatie Bureau (IBFD), the Japan International Cooperation Agency (JICA), the Agence Française de Développement (AFD), the National Tax Association (NTA), the National Tax Service (NTS) and Prospera.
One of the most significant lessons learned pertains to the CTAS, which is poised to elevate Indonesia's tax administration system to the standard of developed nations. With CTAS, the DJP's information system becomes a seamlessly integrated platform, encompassing all tax business processes, leveraging extensive and accurate databases.
In addition to this, business associations such as KADIN, HIPMI and APINDO, along with tax consultant associations, play a pivotal role in shaping tax policies and ensuring that they are designed to help the Indonesian public.
In the pursuit of an effective and efficient tax system, the DJP is continuously making efforts to enhance various facets of administration, regulations and tax collection practices.
Source: Finance Ministry
