Tax Reforms and Financial Performance of the Indonesian Directorate General of Taxes between 2017 and 2021: Literature Review

  • Goenawan T. Pasaribu Brawijaya University, Malang-Indonesia
  • Leila M. Ayu (PhD) Brawijaya University, Malang-Indonesia
  • Almkra Pamuntjak (PhD) Lampung University, Lampung-Indonesia


Governments settle their financial obligations and pay for the public expenditures largely through finances generated from taxes and so the issue of taxation is as old as taxes itself. Formulating of new laws that govern taxation, changes in tax administration as well as minimizing loop holes of tax evasion are some of the factors that lead to improvements in tax revenue collections in Indonesia. In developing countries especially in Asia, tax reforms revolves around matters to do with economic policies while focusing particularly on the design of taxation structure and the tax management. Despite the tax reforms and increasing need to increase revenue collection and enforcement so as to provide public services, Indonesia still faces the challenges of low tax collection and tax administration. The purpose of this study was thus to assess the impact of tax reforms on the financial performance of Indonesian Directorate General of Taxes between 2017 and 2021. This study was informed by two theories; Optimal Tax Reform Theory and Open Systems Theory. The study was a literature based and the findings indicated that the implementation of the new tax systems to replace older tax systems leads to increased revenue collection compared to the past years before the implementation process. It has also been shown that the introduction of administrative tax reforms increased corporate tax compliance in several ways that included the self-assessment system and voluntary compliance which consequently reduced the number of queues at the Indonesia Directorate General of Taxes and huge savings on human resource who used to collect tax prior to the tax reforms. The study thus concluded that, electronic tax registration, and electronic tax identification number, electronic filing of tax return and electronic tax payment and administrative reforms have statistical positive significant relationship with revenue performance, implying that digitalization has a positive and a statistically significant influence on revenue performance. The study thus suggested that policy makers in Indonesia should ensure that there is stable equilibrium for the exchange rates as they adversely affect the tax collection process. Moreover, the laws governing tax collection in Indonesia should be reviewed and criminal liability for those delinquent tax payers, the government also need to offer some support with regards to tax offenders.

Keywords: Tax reforms, Directorate General of Taxes, financial performance, revenue collection, Indonesia


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How to Cite
Pasaribu, G. T., Ayu , L. M., & Pamuntjak , A. (2022). Tax Reforms and Financial Performance of the Indonesian Directorate General of Taxes between 2017 and 2021: Literature Review. Journal of Finance and Accounting, 6(5), 11 - 21.