Page 9 - Working Paper (Asymmetric Information & Its Impact On Tax Compliance Cost In Indonesia)
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DDTC Working Paper 0113  DDTC Working Paper 0113

                   avoidance, informal economy and corruption in a   iv.  Development of an information system for the
                   country.  Additionally high compliance costs also    public  to access  information. Tax  authorities
                   influences the investment climate of a country.      should have an active role in providing services
                                                                        to the taxpayers  without  any preference
                      Considering   the   interaction   models   as     above another. This could potentially increase
                   described  above and its impact  on compliance       administrative cost but on the same time also
                   costs, the following policy options are relevant to   decrease compliance cost in a certain degree.
                   be considered  in order  to anticipate its negative
                                                                    v.  Development of an internal information system
                   effects on the economy:
                                                                        for  the tax  authorities.  This  could ensure
                   i.  Regulations  should  be  simple  and  clear      consistency in the perception of certain cases
                       for each party involved in a tax  system.        and/or interpretation of regulations among tax
                       Regulations  as  a  manifestation  of  contract   authorities.
                       between the Government (in this case the tax   vi.  Conduct tax training for the press to develop
                       authorities)  and  the  people  (in  this  case  the   capacity  in tax matters.  This is important
                       taxpayer) should be drafted where parties well   because the press  is  at the frontline for
                       represented, the contents are feasible,  and     informing the public in tax matters. Besides the
                       rights and obligations are divided equally and   above, the press is also a filter for misleading
                       rationally between the parties concerned.        information  from  public  figures  that  do  not
                   ii.  Information  on decisions  made  by tax  court   have a track record in taxation.
                       should be publicly accessible, so that the public   vii.  Create certainty in the Law (add punishment)
                       could control its consistency with the Law.      regarding uncertainties that is  created  by
                   iii.  The role of tax consultants should be regulated   agents in the interaction models.
                       clearly. This role should not be discriminative   viii. Evaluation  of  certification  requirements  for
                       in nature, but rather based on good corporate    tax consultants to ensure clarity and balance
                       governance principles. Besides the above, tax    in the certification system for tax consultants.
                       consultant should have wider role in resolving   This also includes evaluation of the education
                       asymmetric  information  by  for  example:  an   curriculum  and  the  authorized  institution
                       obligation to provide  services  for  free for   which conducts such certifications.
                       certain small and medium enterprises.
                                                                    ix.  Development of a good system of advance tax
                                                                        rulings to break complexity and uncertainty to
                   17 The World Bank/IFC dan PWC. 2011. Paying Taxes 2012: The Global   lead more compliant taxpayer behavior.
                   Picture, p. 14.

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