A Comparative Analysis of Income Tax Complexity Using Tax Complexity Index: Evidence from Indonesia and Singapore

Naiya Ayu Dina; Ita Salsalina Lingga

Authors

Naiya Ayu Dina Maranatha Christian University,Indonesia Author
Ita Salsalina Lingga Maranatha Christian University,Indonesia Author https://orcid.org/0000-0003-1785-5534

Abstract

Research aim :

This study aims to identify differences in the complexity of Income Tax regulations in Indonesia and Singapore, while also assessing their impacts on the tax revenue.

Design/Methodology/Approach: This study uses a comparative approach to analyze the differences in complexity of tax regulations in Indonesia and Singapore using the Tax Complexity Index (TCI).

Research findings: The research findings shows that the complexity of Income Tax regulations in Indonesia remains relatively high, especially when compared to Singapore. The five criteria of the Tax Complexity Index (TCI) reveal that Indonesia still faces challenges in the complexity of tax regulations.

Theoretical contribution/ Originality: The study contributes theoretically using Economic Deterrence Theory which explains that taxpayer compliance will be determined by how large the cost of tax compliance is. The more complex the tax system or the higher the cost of tax compliance, then the lower the tax compliance. The indicator of tax compliance in this research is the percentage of tax revenue against target.

Practitioner/Policy implication: This study provide contribution for government policymakers the need for a reform approach that focuses on simplifying the structure and ensuring clarity of implementation in tax regulations.

Research limitation/Implication: The analysis does not include taxpayers perceptions regarding the complexity of Income Tax. Furhermore, the research's tax object is limited to Income Tax, excluding other types of taxes such as VAT or Regional Taxes.