World Bank Loan To Strengthen Tax Administration In Indonesia

by Mary Swire, Tax-News.com, Hong Kong

21 January 2009

The World Bank has approved a USD110m loan to help Indonesia boost its income from tax revenues through an overhaul of the tax administration system.

The Project for Indonesian Tax Administration Reform (PINTAR) is aimed at improving the performance of Indonesia’s revenue system – one of the Indonesian Government’s core reform objectives – by increasing efficiency and effectiveness at the Directorate General of Tax to stimulate greater tax compliance, as well as strengthening transparency and accountability in tax administration.

“Indonesia has already embarked on a major effort to reform its system of collecting tax revenues, most notably by revamping the Directorate General of Tax, introducing modern compliance management systems, and passing the Tax Procedures Law in 2008,” explained World Bank Country Director for Indonesia, Joachim von Amsberg, who went on to add:

“Through PINTAR, the World Bank sets out to complement this effort by helping the Indonesian Government expand tax bases, both in terms of increasing the number tax payers and transactions coming into the tax system, which would in turn help generate more non-oil and gas tax revenue.”

PINTAR supports fundamental reforms in both operational and support functions of the tax administration office. The project is made up four main components:

• Increasing the efficiency of taxpayer data collection and management through activities aimed at improving tax payer registration, returns processing, taxpayer accounts management, documents management, and IT infrastructure;
• Human resource management and development through activities aimed at improving human resource policies, training capacity and strengthening anti-corruption;
• Compliance management through activities that strengthen the tax audit and collection functions; and
• Project and change management through activities aimed at strengthening project management and oversight, change management including internal and external communications, quality control, etc.

Jens Kromann Kristensen, the Senior Public Sector Specialist and project team leader commented:

“Through strengthened staff capacity, integrity standards and a more service-oriented approach, PINTAR will enable better taxpayer services that reduce compliance costs for the private sector. A modern integrated IT system will also help raise productivity and facilitate information exchange across the Directorate General of Tax.”

The Directorate General of Tax began its tax reform efforts in 2001, with a strategy aimed at: promoting voluntary compliance among taxpayers; increasing the efficiency of administration; and restoring taxpayers’ confidence in the fairness and integrity of tax administration.

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