The Reasons Why Taxpayers are Lazy or Late to Report Tax Return

Every year, taxpayers (Wajib Pajak/WP) are required to report their annual income tax return (SPT). In order to facilitate the reporting activity by taxpayer, the Directorate General of Taxes (DGT) strives to provide a variety of facilities. Besides manual reporting, DGT has already provided online reporting facilities via e-filing or e-form.

Since the corona virus outbreak (Covid-19) was widespread, the DGT had also eliminated face-to-face services. Automatically, manual reporting method cannot be done. However, DGT has provided a number of relaxation so that taxpayers remain orderly reporting the annual tax return. Including by extending the deadline for reporting individual income tax Return from the original on 31 March 2020 to 30 April 2020. While for corporate taxpayer remains on April 30, but for the submission of tax return completeness documents was given relaxation not more than 30 June 2020. 

But the series of relaxation and facilities provided by the government do not seem to be effective in making taxpayers obedient. Based on DGT data, as of 1 May, 2020, the number of annual tax returns that had been collected  was as many as 10.97 million. The amount dropped to 9.43% when compared to the same period in the previous year.

As cited from Bisnis.com, the formal compliance ratio fell from 66 percent on 1 May last year to 57.7 percent this year. In fact, DGT had set a target for the realization of the annual income tax return could reach the level of formal compliance at the average of 80% -85% of the number of reported tax returns that is as many as 19 million taxpayers or the equivalent of 15.2 million-16.1 million reports. 

Quoted from Kontan.co.id, the realization of tax return submission this year is still dominated by individual taxpayers.The number of tax returns reported by individual taxpayers both employees and non-employees reached 10.01 million reports, 12.03% lower compared to 30 April 2019 of 11.38 million reports. While the realization of the submission of annual tax returns by corporate taxpayers is as much as 584,016 reports, down 20.8% compared to the same period last year around 737,936 reports.

The level of compliance of taxpayers in Indonesia is still in the range of 60-70 percent with the dominance of individual taxpayers of employee category, not the corporate taxpayers or entrepreneurs. Taxpayer compliance actually includes compliance in recording business transactions, compliance in reporting business activities in accordance with applicable regulations, and compliance in all other taxation rules. Among the three types of compliance, the easiest to observe is compliance in reporting business activities, because all taxpayers must submit reports on their business activities every month and / or every year in the form of submitting tax return.

However, many taxpayers are still reluctant to report. Besides not reporting, another habit is that taxpayer often submit its tax return report very close to the deadline or specified time limit. Not a few of them also just reported tax returns on the last day. As a result, the DGT website was down and could not be accessed because of a very heavy traffic. So that in the end there were lots of taxpayers who finally canceled the report.  Here are some reasons that make taxpayer lazy or late to report tax return:

1. Do not know how to report tax return

Based on a Survey of Service Satisfaction and the Effectiveness of Counseling and Public Relations in 2019 conducted by the DGT, as many as 60.82 percent of respondents expressed ignorance of the tax return reporting method. In this regard, the government is trying to do improvements by increasing the functionality of pajak.go.id website to keep it informative and useful for taxpayers.

2. The annual tax return form is still considered a complicated document to be filled out correctly

DGT has provided various facilities for tax return reporting.  However, this convenience is only limited to the delivery and processing of reports, while the substance is still relatively difficult. Although filling tutorials are already on the internet but there are still a lot of taxpayers who reluctantly learn it. 

3. Considering no need to report since the income is tax-deductible

Many taxpayers who think that there is no need to report the tax return because the salary has also been taxed and has been deposited by the company. This assumption usually occurs among employees.  Coupled with the complexity of filling tax return, it makes taxpayer even more lazy to report.

4. The nominal imposition of fine sanction is still too small

Based on the General Tax Provisions and Procedures Law (Undang-Undang tentang Ketentuan Umum dan Tatacara Perpajakan/KUP), the delay in reporting the annual tax return will be subject to a fine of IDR 100.000 for individual taxpayers and IDR 1 million for corporate taxpayers. The imposition of sanction in the form of fines is still relatively small, so there are still many taxpayers who ignore the obligation to report tax return.

5. Taxpayer's residence is far from KPP or KP2KP

It turns out that not all taxpayers are technology literate so they are able to use e-filing or e-form facilities. Many taxpayers do not routinely report tax returns because their residence is far from the Tax Office (KPP) or Tax Services, Dissemination and Consultation Office (KP2KP). These taxpayers have not been able to release their dependency to always be guided by tax officials when filling out tax return.

6. Reluctant to report because they don't feel the benefits of the taxes that have been collected from the community

The fact is not all taxpayers intend to carry out their tax obligations. One of reasons why taxpayers are indeed lazy to report because they feel they do not get the benefit of the tax that has been paid to the state. Among others, in terms of infrastructure, there are still many damaged roads to public services that are considered unsatisfactory. 

This year, the decline in the number of tax return reporting is more or less influenced by the existence of a Large-Scale Social Restrictions (PSBB) policy since the corona virus broke out in Indonesia. Quoted from kontan.co.id, before the enactment of the PSBB, the DGT intensively conducted face-to-face socialization. For example, by making a tax corner, tax classes at the Tax Office, or filling tax returns for company / agency employees. The government has also expanded educational materials such as tax return filling video tutorials that can be accessed on the website, or DGT social media. In addition, DGT has also expanded the electronic communication channels, such as telephone, whatsapp, and online tax classes.

However, DGT also admitted that to improve compliance, a change in mindset from taxpayers are needed. The efforts to increase awareness must be accompanied by efforts to increase knowledge, both knowledge of taxation and taxation facilities. (Ken)