pro-visioner.com – Digital Transformation and Tax Compliance , Digital transformation is underway at the Directorate General of Taxes. It has not yet been completed, but the results have been felt.
Before discussing the topic above, the author would like to bring to a common understanding of what digitization and digitalization are.
Digitization
Digitization is the process of converting from analog system to digital system. Digitization focuses on optimizing internal processes, such as work automation, minimizing the use of paper, and so on. The goal is none other than to reduce costs and production costs.
Digitization can also be said to be digitizing things that were once analog into digital. For example, written documents on paper are made into electronic documents such as pdf, doc, or other formats. For example, scanning paper documents and storing them on a computer hard drive as digital documents, or replacing paper for recording and viewing data with worksheets in office applications.
Digitization
There are several definitions that describe digitalization. One of them is the definition from the academic side according to Brennen and Kries. Both define digitalization as digital communication and the impact of digital media on contemporary social life.
Also Read: Implications of Digitalization for Consultants and Taxpayers
The gartner.com dictionary of terms defines digitization as ‘the use of digital technology to transform a business model and provide new revenue and value-generating opportunities; it is a process of moving to digital business’.
Digitalization is the process of creating or improving business processes using digital technology and data. The term digitization refers to the use of digital technologies and data to improve business, revenue, and create a digital culture. In practice, digital data is used as the main support for the entire process.
At the digitization stage, companies have been able to change business processes to be more efficient, productive, and profitable. An example of practice is uploading data or information to the cloud and sharing it with colleagues so that it can be accessed and viewed simultaneously, then analyzed for business purposes.
Digital transformation
Next is the most important, because many companies, institutions and institutions use the term digitalization to refer to digital transformation. Even though the two are different. Why is it different? Because digital transformation refers to the wider adoption of digital technology and there are cultural changes in it. Digital transformation can be said to focus more on humans than digital technology.
The digital transformation process changes the concept organizationally, becoming more customer-centric or customer satisfaction supported by leadership, driven by challenges to the culture of the company, institution or institution, and the use of technology that empowers employees or employees.
Why is this important to discuss because digitization and digitalization are stages or parts of the process towards digital transformation. Digital transformation covers all aspects of business, and its implementation is not just about utilizing technology. Human resources, technology, and business strategy synergize to produce a better business.
Also Read: Welcoming the inevitability of digitalization
If this is drawn to the realm of government, then to create good governance which is closely related to the use of communication and information technology, these three stages are the main requirements that must be followed.
Technology has changed the face of world civilization, many things have changed because of technology, one of which is human behavior, whether we realize it or not, humans in the Industry 4.0 era are very dependent on one of the technology products, namely smart devices or smartphones. A lot of research conducted by experts, one of which was in 2017-2018 before the covid-19 pandemic hit the world, namely APJII (Association of Indonesian Internet Service Providers) stated that the duration of Indonesians in contact with the internet world on their smartphones averaged 6-8 hours a day with a touch to the cellphone screen more than 150 taps or touches a day. (Of course, during a pandemic this activity becomes more intense because people have to do a lot of activities at home).
Seeing this, the taxation institution in our country, namely the Directorate General of Taxes as the taxation authority, is moving quickly to carry out digital transformation in providing the best service for taxpayers and the public. The hope is that taxpayer compliance will increase and lead to the achievement of state revenue in the taxation sector in accordance with the target to be achieved in the State Budget (APBN). It is like we do not want to use an old war machine that is outdated and technologically obsolete. The war machine must be updated to be able to prevent threats from outside parties.
The Directorate General of Taxes conducted a major modernization following the approval of a cooperation agreement between the Directorate General of Taxes of the Ministry of Finance with LG CNS-Qualysoft Consortium and PT Deloitte Consulting.
LG CNS-Qualysoft Consortium is the winner of the tender for the procurement of system integrators, and PT Deloitte Consulting is the winner of the tender for project management consulting services and quality assurance. The contract values that have been agreed by both are IDR 1.2 trillion and IDR 110 billion, respectively. This project is called P-SIAP or Core Tax Administration System Update. With the core tax administration system, there are 21 DGT business processes that will be redesigned, including registration, territorial supervision or extensification, tax return management, payment, third-party data, exchange of information (EOI), collection, and taxpayer account management (TAM).
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Then, examination, examination of bukper (preliminary evidence) and investigation, compliance risk management (CRM), business intelligence, intelligence, document management system, data quality management, objections and appeals, non-objection, supervision, assessment, education services, and knowledge management.
This project is targeted to be ready for use in 2023.
This lighthouse project is certainly not just done without a comparative study process with other countries beforehand. One country that is considered successful in implementing this digital transformation is Australia. Indonesia has even established cooperation with Australia in the field of taxation. The reason is, there are many lessons learned by DGT related to tax policies that have been carried out by this Kangaroo Country.
The Australian Taxation Office (ATO) also provides a lot of assistance and shares experiences related to the digitization of the tax administration system. The assistance and suggestions from the Australian tax authority have become DGT’s consideration in making policy improvements.
Four areas that have received assistance from ATO are first, service to taxpayers with the 3C program (Click, Call and Counter). Second, the improvement of core tax system. Third, the implementation of Compliance Risk Management (CRM). Fourth, the implementation of digital tax for cross-border electronic transactions.
The author sees that with the modernization project of tax administration based on digitalization, it is indeed time to do it, even when the Covid pandemic outbreak takes place, DGT has actually changed almost all types of tax services carried out at KPP to an electronic page, namely DJPONLINE. The author often calls it the Virtual Tax Office. This is one of the real manifestations of digital transformation in the field of taxation.
Taxpayers benefit greatly from the increased cost and time efficiency. There are no more queues and no more paper documents when reporting tax obligations or making certain requests.
DJPONLINE will be a big house owned by the Taxpayer, only with a registered account, the Taxpayer can fulfill tax obligations and utilize the tax facilities in a big house called DJPONLINE. In it, there is a room or rooms for electronic tax return reporting (e-Filing), a room for making tax payments (e-Billing), a room for viewing tax bills and tax accounts (e-Tax Payer Account), a room or rooms for objecting to tax assessments (e-Objection) and many other rooms or rooms in the DGTONLINE mansion.
The end of this paper is a big question, namely whether the digitization of tax administration as a whole will be able to increase taxpayer compliance in this country?
As a starting data, Indonesia’s tax ratio until 2022 is 9.11 percent, which is very small and even the lowest in Asia Pacific countries. Let us wait after 2024 whether our country’s tax ratio will soar through double digits or vice versa. Optimistic space must always accompany the taxation personnel (tax authorities and taxpayers) in this country because it is from taxes that this country depends on.
