Understanding Tax Reform Phase III

By Aditya Wibisono, Employee of the Directorate General of Taxes

I was invited to attend a workshop about tax reform last week in Bogor and met with so many talented writers in DGT. We all gathered together to understand about tax reform and gain beliefs that this program will bring DGT into a better institution with credible, strong, and accountable reputation. In this second year, the tax reform is still rolling and all the team members are working hard to accomplish significant progress in 5 pillars, organization, human resources, business process, IT, and regulations.

It is hard to believe that there are still many employees who are not aware that we are in the middle of reform with target to finish in 2024. This is not the first tax reform in our institution but there is an obligation that as the member of this institution we have to understand what is happening without challenging what have been decided by the top level because we all have obligation to support the policy that has been taken by our top level of management.

Tax reform in our institution can be defined as overall refinement of tax administration system that consists of organization, human resources, business process, data base and information technology, and tax regulation improvement.

The reasons why we need this reform because we want our current organization to be more adaptive to respond to the external needs. Our organization capabilities in collecting revenues weaken by declining tax ratio in the last 10 years as well as our failure to achieve tax revenue target since 2008. We also need to refine our human resources capacity and capability since we have more than 40 thousands employees already. We also need to improve our information system and data base to be more credible and reliable so we can use for optimum tax supervision and potential.

As for business process, we need be able to develop effective, efficient, and accountable business process with technology based and more simple business process to fit with international leading practice. We must be aware that we are ready to implement automatic exchange of information this year so there will be flood of data coming to our institution and we must be ready to capture the potential of those data. Development of credible data base and information system must also be delivered through this reform by covering core tax administration system and operational support tax administration system. The improvement of regulation is the last but not the least to ensure law assurance aspect and guarantee fairness for the taxpayers.

To ensure that this tax reform will be successful, there are terms and conditions that must be preserved such as strong leadership role, internal and external stakeholders engagement, and dedicated resources who are involved in this tax reform team. The key success factors also include strong legal basis, for example by issuing Ministry of Finance Decree or President Regulations and good governance is very important to make every step of the tax reform diligence.  

If this tax reform successful, not only we can benefit from this reform but the taxpayers will also enjoy the results such as compliance cost reduction or even elimination, secure e-service and service improvement, better law assurance, improvement in fairness in the implementation of tax administration and the ultimate goal is the improvement of satisfaction and trust of the taxpayers towards DGT.

Without good understanding about tax reform, there is always potential possibility that this reform fail in the middle because most of the employees do not support the program. Based on the facts that most of the reform in an institution fail not because of the comprehensive plan or program but more because a strong resistance from the employees. Based on these facts and research, we, as DGT employees must support this program and let our friends, colleagues, and employees know about tax reform. The future of our beloved institution lies in our hands and we all must be aware of that. (*)

*) The information and views set out in this article are those of the author and do not necessarily reflect the official opinion of the institution in which the author works.