Tax Digitalization in Indonesia: Success Factors and Pathways Forward

Over the past two decades, Indonesia has been working to modernize its tax system through a wide range of digitalization initiatives. These efforts have aimed to deliver benefits for both Indonesian taxpayers and for government authorities administering the tax system at all levels. Crucially, this includes increased revenue collection that can be used to help advance the Sustainable Development Goals, supporting Indonesia’s people, prosperity, and environment. Indonesia’s tax digitalization journey has been led by the Directorate General of Taxes (DGT); Indonesia’s national entity responsible for collecting federal taxes. Through its digitalization initiatives, Indonesia’s tax system has taken great strides forward, although not all tax initiatives have been successful. Key achievements are set out immediately below, along with key lessons from Indonesia’s tax digitalization journey that could inform other countries’ reform efforts. Of course, as in all countries, there remains much work ahead to ensure the benefits of digitalization are fully realized. This is particularly the case as Indonesia implements its new Core Tax System in the period immediately ahead and continues to explore new digitalization measures in the future. This paper sets out pathways forward to help realize the full potential of digitalization, with specific and practical recommendations.