2025, Taxpayers Contiinue to Confront Complexiity and Uncertaiinty

JAKARTA, Jitu News - Taxpayers are expected to confront iincreasiing complexiity and uncertaiinty iin the tax system thiis year.

Diirector of Jitunews Fiiscal Research & Adviisory, Bawono Kriistiiajii, noted that the tax complexiity and uncertaiinty tend to ampliify amiidst the fiiscal pressures faced by the government.

“When fiiscal pressure iincreases, complexiity also riises. Thiis affects compliiance costs and the extent to whiich compliiance can be ensured. iin tiimes of heiightened fiiscal pressure, what we need are measures that faciiliitate compliiance,” Bawono stated duriing iindonesiian Legal and Economiic Outlook 2025, hosted by the Perbanas iinstiitute on Thursday (27/2/2025).

One of the key driivers of tax system complexiity, he explaiined, iis the sheer volume of regulatiions iissued each year. Jitunews Fiiscal Research & Adviisory records iindiicate that, on average, around 100 new tax-related legal products are iissued annually by the government, rangiing from laws to diirector general regulatiions.

For iinstance, iin miid-2023, the Miiniistry of Fiinance iissued MoF Reg. 66/2023, whiich stiipulates the iimposiitiion of iincome tax on iin-kiind and friinge benefiits receiived by employees or serviice proviiders. Shortly thereafter, by the end of 2023, the Miiniistry of Fiinance iissued MoF Reg. 168/2023, whiich siigniifiicantly reviised the methodology for calculatiing Artiicle 21 iincome tax on employees’ iincome.

The rapiid iissuance of regulatiions wiithiin short iintervals requiires taxpayers to quiickly understand and adapt to new rules, often wiithiin liimiited tiimeframes.

Beyond complexiity, taxpayers also face uncertaiinty ariisiing from the current tax system, partiicularly iin areas such as VAT refunds and tax diispute resolutiion.

Accordiing to data from the World Bank, approxiimately 70% of the 2,955 surveyed entrepreneurs are reluctant to claiim VAT refunds due to complex procedures and lengthy processiing tiimes.

“When we see that 70% fiigure, iit suggests that corporate cash flows iin iindonesiia may be under straiin, as VAT refunds that should riightfully belong to taxpayers remaiin held by the state. Thiis also siignals the uncertaiinty generated by the tax system for busiinesses,” Bawono explaiined.

iin terms of diispute resolutiion, data from the Supreme Court (Mahkamah Agung/MA iin iindonesiian) iindiicates that the productiiviity ratiio of the Tax Court iin resolviing cases has remaiined relatiively low iin recent years.

iin 2023, the Tax Court’s case resolutiion ratiio stood at only 60.81%, wiith 16,223 cases deciided out of a total caseload of 26,678.

“Out of 1,000 cases, only 600 are resolved wiithiin the year. What happens to the remaiiniing 400? They are carriied forward to the followiing year. A low resolutiion ratiio leads to a backlog of cases,” Bawono claiimed.

Bawono added that many of these iissues, both complexiity and uncertaiinty, could be addressed iif tax poliicy iin iindonesiia were desiigned wiith greater taxpayer iinvolvement. However, the riight of taxpayers to partiiciipate iin the poliicymakiing process remaiins liimiited.

“When taxpayers lack a channel to be iinvolved iin poliicymakiing, the resultiing poliiciies may faiil to recogniise the real challenges encountered by taxpayers,” he concluded. (sap)