Tax Compliance After the Implementation of Tax Amnesty in Indonesia

Fany Inasius,Engelwati Gani,Gatot Soepriyanto,Giri Darijanto

doi:10.1177/2158244020968793

Abstract

The Slippery Slope Framework argues that taxpayers’ trust in government and their perceptions of government’s power explain the extent of their tax compliance. This study empirically examines such influences on taxpayers’ perceptions of tax compliance (either voluntary or enforced) in Indonesia after the implementation of a tax amnesty. In 2018, data were collected through a face-to-face questionnaire survey of 410 small business taxpayers and analyzed using a stepwise linear regression model. Trust in government was positively related to agreement with/support of voluntary tax compliance; however, perceptions of government’s power were only marginally significant. Neither trust in government nor perceptions of government’s power influenced taxpayers’ perceptions of enforced tax compliance. These findings partly support the Slippery Slope Framework. This study contributes to the literature on the influence of trust and power on voluntary or enforced tax compliance in developing countries, particularly Asia, after the implementation of a tax amnesty.

Highlights

To explain taxpayers’ tax compliance, Kirchler et al (2008) proposed the Slippery Slope Framework and highlighted trust and power as new ways to understand compliance behaviors. They suggested that the effectiveness of economic and noneconomic factors to induce compliance mostly depends on the existence of a trustful relationship between taxpayers and the government
Because a country’s tax-to-GDP (GDP refers to gross domestic product) ratio is computed using actual tax revenues, it indicates the extent of taxpayers’ tax compliance
Indonesia’s tax-to-GDP ratio was low compared with other Asian countries, including Malaysia and Singapore, and its tax-to-GDP ratio remained stable between 2012 and 2014 (Inasius, 2019a), after which it declined to approximately 11% in 2015 and 2016 (World Bank, 2017)

Summary

Introduction

To explain taxpayers’ tax compliance, Kirchler et al (2008) proposed the Slippery Slope Framework and highlighted trust and power as new ways to understand compliance behaviors. They suggested that the effectiveness of economic and noneconomic factors to induce compliance mostly depends on the existence of a trustful relationship between taxpayers and the government. The large amount of revenue collected in penalties indicates that the extent of tax compliance had been low In developing countries such as Indonesia, there are numerous reasons why tax noncompliance may be high before the implementation of a tax amnesty program.

Methods

Results

Conclusion