Broader Accounting Regime to Serve National Interest - The Case for Enterprise Tax Compliance in Indonesia

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Abstract

This paper offers a discussion of the accounting practice influence tax compliance in Indonesia. First, we are concerned about the different possibilities that cause the low tax compliance. Then we differentiate the business size level in order to capture the relevant cause of tax compliance in the context of accounting report. This paper contributes to the academic literature of accounting that serve public interest and not only limited to accounting to provide financial information for decision maker and financial provider. This paper highlight how accounting can do more for economy as wide and how its implementation for taxation purpose in different business size. We find the case of Indonesia tax compliance after tax amnesty program that does not fulfil the target of national tax income because of too aggressive in tax planning for big corporations and too narrow accounting knowledge for small businesses. We find that ethical and technical training are needed for accountants to enhance tax compliance. Ethical and sustainable accounting training is emphasized for big corporations. Technical, sustainable accounting and ethical training with simpler format accounting is targeted for small business owner. This could help the success of government of Indonesia to boost tax collection.

Author

• MUHAMMAD IRKA IRFA DAROJAT, University of Edinburgh sponsored by Scholarship from LPDP (Indonesia Endowment Fund for Education