Vehicle Tax Compliance in Indonesia is Considered Low

KatadataOTO – The DEN (National Economic Council) recently revealed that mandatory tax compliance, including for vehicles in Indonesia, is still relatively low.

Therefore, steps need to be taken by the government to improve tax discipline in the country.

“For example, out of more than 100 million cars and motorcycles, only 50 percent pay taxes. So our compliance is very low,” said Luhut Binsar Pandjaitan, Chairman of DEN, as quoted from Antara, Friday (10/1).

As of January 1, 2025, there will be an implementation of Coretax developed by the DJP (Directorate General of Taxes) of the Ministry of Finance. The system includes digitalization related to taxation, making it more orderly, transparent, and real-time.

Photo : Regional Police

This new series of systems is expected to increase public compliance with taxation, thus having a positive impact on state revenue.

It was further explained that in the future, a number of economic activities, including passport and driver's license (SIM) renewals, will be blocked if taxpayers do not settle their obligations.

Then there is integration with the GovTech system, also known as integrated government services. Activities such as unreported vehicle purchases can be easily checked by the DJP.

However, on the other hand, the National Police's Korlantas (Traffic Corps) sees an increase in public tax compliance.

“Currently, it is more than 50 percent, whereas previously it was only around 40 percent. This compliance indicator is particularly in tax payments,” said Inspector General Aan Suhanan, Head of the National Police Traffic Corps, in his statement.

Photo : NTMC Polri

He hopes that in the future, public tax payment compliance can continue to be improved, as the percentage has tended to increase from year to year.

The digitized and integrated tax system, also known as Coretax, is claimed to be able to encourage compliance and has the potential to increase state revenue by up to 6.4 percent of GDP (Gross Domestic Product), or the equivalent of IDR 1.5 trillion.

The implementation of Coretax is also said to have received encouragement from World Bank recommendations. Its budget was IDR 3 trillion and it was successfully developed with funds under IDR 2 trillion.