Examination Factors Affected the Personal Income Tax Compliance In Aceh Province, Indonesia

Abstract

The collection of tax revenues is essential for a government to ensure its funding. From the structure of national budget 2011, it can be seem that tax revenues represent 79% of all government revenue. Now tax can play important role in all aspect government like political and economic perspective. Tax revenue from Aceh in 2011 contribute .....% (Rp....) for national tax revenue. It seems too small number of contributing for national tax revenues. Aceh Province was the site of the December 2004 tsunami, which killed an estimated 167,000 people. It was also the site of a 30-year civil war between the separatist Free Aceh Movement (GAM in Indonesian) and the Indonesian government, which ended with the signing of a peace agreement in August 2005. After the Aceh Recovery Framework (ARF) was announced by the Governor of Aceh in 2007 as a turning point in strategic planning and coordination around the broader spectrum of transitional issues that must be more fully understood and managed as a whole, Aceh became a province that be growth normally and would be a sustainable place for improvement land. Those situations affect to the economic growth in Aceh from 2008 until 2011. The ARF is at once the Governor’s mission and vision translated into a transitional roadmap from 2008 to 2011; a transparent and shared planning and monitoring mechanism; and a coordination structure for partners and stakeholders that enriches government policy and planning with the acquired wisdom, lessons learned and targeted assistance of those helping Aceh to fully recover and flourish. All situation change can not effect more significant in tax revenue. Event the tax compliance in Aceh. We knew that Indonesia adopts the self-assessment method for individuals to calculate, settle, and report income tax. So in Aceh this could be treating like another province that applied tax regulation exchange since 2008. In this case, it’s not easy to measure tax compliance in Aceh, because the applied of taxation still a new thing that applied after Tsunami and civil war Free Aceh Movement. As we know that noneconomic factors are a dominant factors affected in tax compliance in Aceh. The question is how Directorate General Tax to measure tax compliance and find out the solution to increase tax revenue and to reduce tax evasion.Tax compliance had involved many economic factors such as: the level of actual income, tax rate,tax benefits,tax audit, audit probabilities, fines and penalties and there are many noneconomic factors to affect the level of tax compliance. Many researches have been done to include these noneconomic factors to explain tax compliance behavior under the framework of economic analysis ( for example; Alm, Jackson, and McKee (1993), Alm, Sanchez, and DeJuan (1995), Park and Hyun (2003)). These noneconomic factors include the willingness to pay for public provision, pubic education, tax morale, tax information, and etc. As there are some limitations to include all noneconomic factors for the analysis of tax compliance behavior, most studies pay attention to just one or several factors for rigorous analysis. Even though we understand that noneconomic factors are the important determinants for the level of tax compliance, it is hard to compare these noneconomic factors between Korea and Japan, due to limited information. We just focus on one noneconomic factor to partly explain the difference of the levels of tax compliance between them, which is the policy of tax information disclosure. Directorate General Tax still just had examined any factor that affected to the tax compliance in all over the the province in Indonesia. But in Aceh, there are differences aspect that became factors dominant which found in many cases tax audit and tax report. This research had the aim to analyze the factors that affected to the individual tax compliance in Aceh province from 2005 until 2011.