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OECD offers RI ideas for boosting tax revenue
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An official explains to a taxpayer the use of the citizenship identity number as their taxpayer identification number at Palangka Raya tax office in the Central Kalimantan capital city on March 3, 2024.
(Antara/Auliya Rahman)
T
he Organisation for Economic Co-operation and Development’s (OECD) latest Indonesia Economic Survey includes recommendations for increasing tax revenue as a share of GDP, with a key focus on better tax administration.
Structural tax reform, according to the survey report published on Tuesday, could increase revenue by up to 1 percent of the country’s GDP.
According to Statistics Indonesia (BPS), Indonesia’s GDP was Rp 20.892 quadrillion (US$1.317 trillion) in 2023, suggesting that improved tax administration, as per the OECD calculation, would yield Rp 208.92 trillion in extra state revenue.
Key factors for improving tax administration, according to the report, include making full use of digitalization, which would require sufficient connectivity and capable human resources.
Another factor is strengthening compliance risk management through automated risk profiling, which would involve computer systems to process third-party data and prefilling returns.
In addition, the report highlights the importance of adequately staffing tax administration agencies with qualified and properly incentivized personnel.
“Levels of taxation have historically been low in Indonesia, limiting the ability of the government to finance priority initiatives,” according to the report, which finds that tax revenue in the country is among the lowest in ASEAN and requires an increase “over the medium term”.
