How does Indonesia's new tax system, Core Tax, work?

Core Tax Administration System (CTAS) is an information technology that supports The Directorate General of Taxes (DJP) by conducting business automation processes, which involves processing notification letters, tax documents, tax payments, inspection and billing support, and taxpayer registration.

The system development has been regulated in Presidential Regulation (Perpres) Number 40 of 2018. Chapter 8 stated that the development of information technology on improving the tax administration system involves Core Tax Administration System and Operational Support Tax Administration System.

CTAS works by gathering and integrating tax data from various sources such as financial institutions. After the data has been gathered, CTAS perform an analysis to identify tax compliance, potential risk, and taxpayer pattern behaviors. Next, CTAS conducts an automatic taxation process such as tax calculation, billing, refund, and penalty for tax violations. The system also provides accurate and complete financial tax reports and facilitates efficient audit processes.

CTAS is expected to increase the efficiency of tax administration and increase tax compliance. Minister of Finance, Sri Mulyani Indrawati, mentioned that Core Tax will be a tool to keep the effectiveness for tax reform by improving the administration process. In the meantime, CTAS is still in development and is predicted to be done on 1 July 2024.

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