Page 2 - Working Paper (Asymmetric Information & Its Impact On Tax Compliance Cost In Indonesia)
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DDTC Working Paper 0113                                                                                                DDTC Working Paper 0113

                                      Asymmetric Information and

                                     Its Impact on Tax Compliance

                                                                 Cost in Indonesia:

                                                                          A Conceptual Approach

                   B. Bawono Kristiaji  1

                   A complexity of a tax system has a direct
                   relationship  with  the hidden  cost of
                   taxation.  The hidden  cost of taxation  is                TABLE OF CONTENTS
                   considered as compliance cost. There is a
                   missing  link  between  the relationship of
                   compliance cost and the complexity of  a
                   tax system starts from the situation called                1.  Introduction ............ 3
                   asymmetric information.
                                                                              2.  Theory of
                   Asymmetric  information  clarifies  the                      asymmetric
                   behavior patterns of actors in a transaction                 information and
                   in the situation where there is an imbalance                 compliance cost ...... 3
                   of information that could potentially result
                   in a  market failure. Through assuming a                   3.  Relationship
                   model where actors  are interacting  with                    of asymmetric
                   each other in a tax system, thereby could                    information and
                   be found the implication of compliance                       compliance cost ...... 4
                   cost in Indonesia.
                                                                              4.  The implications
                   In   the    context   of   economics     of                  of compliance cost
                   development, the presence of compliance                      in Indonesia and
                   cost  will  trigger  high  cost  economy of  a               proposed policy for
                   country and considered as a disincentive                     its solution .............. 8
                   to taxpayers  in complying with the
                   tax  system. Focusing on a conceptual
                   approach and its relationship with current
                   tax  developments in Indonesia, this
                   study recommend  several  policies that
                   are considered  to  anticipate  its negative
                   effects on the economy.

                   1  Partner,  Research  dan  Training Services  DANNY  DARUSSALAM  Tax
                   Center.  The  author gratefully acknowledges helpful  comments from
                   Darussalam and Danny Septriadi, as well as valuable input during the
                   works from Yusuf W. Ngantung, Ganda Christian Tobing and Muhammad


                   The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or
                   entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate
                   as of the date received or that it will continue to be accurate in the future. The author’s views expressed in this Working Paper do not
                   necessarily reflect of the views of DANNY DARUSSLAM Tax Center. Working Papers describe research in progress by the authors and are
                   published to elicit comments and to further debate.
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