Challenges of Digital Tax Administration Transformation in Indonesia

Abstract

The purposes of this chapter are to identify how digital transformation can enhance the efficiency, transparency, and cost-effectiveness of tax administration, leading to increased tax revenue and reduced compliance costs in Indonesia. The results of study indicate that the digital transformation of tax administration in Indonesia is currently in the acceleration stage. The tax authority (DGT) has set a policy for digital transformation in the tax administration system to reduce compliance costs and improve administrative process efficiency, as well as optimize budgetary functions. DGT has developed big data processing from taxpayers and external parties for analysis purposes used by authorities for compliance risk management, business intelligence, surveillance, audit, and more. The challenges of digital transformation in tax administration in Indonesia are the integration of information system applications in DGT. Another challenge is the difference in interests between authorities, technological platform differences, and the willingness level of each authority toward the adoption of integrated automation processes in all sectors in Indonesia. Therefore, it is crucial to build collaboration in the development of an integrated information system and strategic adjustments to business processes. National enterprise architecture-related policies are highly needed to achieve strategic digital transformation objectives.