Page 10 - Indonesia Taxation Quarterly Report (Q2-2020)

INDONESIA TAXATION QUARTERLY REPORT Q2-2020

in taxing the digital economy. The other has issued several policies on the
alternative is to suggest a wealth tax for digitalization of tax administration and
those who have avoided economic ‘pain’ amended policies related to reporting,
during the crisis. We can infer from the auditing, objections, tax dispute
past that the ability of the government resolution, and so forth. These policies
to manage fiscal space becomes very aim to facilitate the implementation of
important to consider in the time of tax rights and obligations and adapt to
economic crisis related to health sector. the current pandemic.

As much as economy needs tax policy In responding to the economic
supports, it will eventually have to slowdown challenges, one of the widely
ensure that future tax bases, or so-called used instruments is tax policies, ranging
‘tax base’ are able to keep the fiscal from income tax relief, accelerated
sustainability alive. Otherwise, second refunds, to tax administration relief.
economic downturn may possibly arise The pandemic and technological
rooted from unpaid debts or unfunded developments significantly drive various
development. In addition, to anticipate continuous tax policy in a short period
future possible crises with more resilient of time. Unfortunately, this may lead
revenue performance, tax revenue should to tax information asymmetries in the
be more diversified and more reliant society that results in obstacles to the
on personal income tax than corporate implementation of tax administrative
one. In parallel, broadening tax bases policies and the realization of incentive
should be carried out to balance the tax utilization. Regarding to this, the
expenditures, particularly in personal Indonesian Government currently
income taxes, VAT, and new taxes based provides a number of tax incentives,
on wealth.
A set of policies issued by the
government during the pandemic may be
Adapting Tax Administration imperfect, but adaptation and revision in
to the New Normal substance and in administration can be
expected. Now may be the momentum
for the government to introduce taxes
The inevitable developments in and socialize an understanding of the
technology and globalization have led role of taxes in future developments to
to new business processes in line with the wider community. Not only should
the increase in domestic and cross- the tax education target (unregistered)
jurisdictional transactions. Parallel taxpayers, but also prospective
with this trend, tax standards and future taxpayers, such as students or
administrative processes must adapt to university students. To realize mutual
the required developments and needs. understanding, a new paradigm based
Not only will these reforms play a role on transparency, openness, mutual trust,
in collecting tax revenues, but also in and mutual understanding between
establishing an equal and collaborative taxpayers and tax authorities is called
relationship with taxpayers and other for.
stakeholders.

In the future, in addition to taking
While the need for digitization increases, anticipatory measures towards digital
the Covid-19 pandemic poses challenges transformation, the tax authorities
for tax authorities to speed up the pace should also take precautionary steps
of technology utilization in the tax towards the consequences of digital
system. Such situation, which demands transformation that is or will be
social distancing and avoiding crowds carried out in the future. Thorough and
to prevent the spread of the virus, consistent evaluation and monitoring
certainly plays a role in changing the tax processes are, therefore, needed, and
administration system from face-to-face definitely involve competent human
to online using electronic means. resources in their respective fields.

Accordingly, tax administration In terms of the tax authority
transformation has to be bolstered organization’s business processes, the
by appropriate, easy-to-implement, taxpayers’ convenience aspect needs to
and efficient regulations, business be maximized. As such, easily accessible
processes, and roadmaps. Accordingly, integrated services are essential. For
the Directorate General of Taxes (DGT) example, the Australian tax authorities

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