TCF as a Key Tool for Digital-Era Tax Compliance Challenges

JAKARTA, DDTCNews - The rapid pace of digitalisation affecting taxation must be addressed through the establishment of a robust risk control framework. In addition to the existing compliance risk management (CRM), the implementation of a tax control framework (TCF) is also essential.

Manager of DDTC Fiscal Research and Advisory, Denny Visaro, noted that all sectors of the economy are now digitalised to varying degrees. This condition leads to both challenges and opportunities, particularly in facilitating processes for taxpayers and tax authorities.

“To bridge these challenges and opportunities, we need instruments to accommodate these changes [digitalisation]. Tax authorities already apply the CRM, while for the taxpayers, a tax control framework is necessary,” he said during the Petra Agile & Integrity Forum: Compliance and Sustainability Growth, held by Petra Christian University on Tuesday (30/9/2025).

Denny explained that the Directorate General of Taxes (DGT) has implemented the CRM to identify, map and mitigate taxpayer risks based on their profiles. Through the CRM, authorities can be fairer and more objective in handling taxpayers.

“The DGT needs to distinguish the treatment of taxpayers that are deliberately non-compliant and those that are non-compliant due to a lack of understanding of the rules,” he added.

He highlighted that data-driven technologies and artificial intelligence (AI) play a pivotal role in identifying risks. With comprehensive digital data on taxpayer behaviour, authorities can more quickly detect anomalies in transactions.

Beyond the authority’s perspective, Denny also highlighted the importance of implementing a risk control framework within taxpayers’ internal systems through the TCF. By adopting the TCF, taxpayers can demonstrate transparency, standardised and measurable business processes and data completeness.

Taxpayers can also report ledgers and financial statements to the DGT in real time. When the CRM and TCF are interconnected, mapping tax compliance risks becomes significantly easier, enabling more effective follow-up.

“This has been implemented in many countries. As a result, when a taxpayer is high-risk and non-compliant, authorities do not need to wait for a notice of tax audit findings (surat pemberitahuan hasil pemeriksaan/SPHP in Indonesian) and letter of inquiry (surat permintaan penjelasan atas data dan/atau keterangan/SP2DK in Indonesian). The system, powered by artificial intelligence, can immediately generate warnings,” he explained.

Policy Recommendations

Indonesia can draw lessons from countries that have already implemented the TCF, including Malaysia, Singapore, China, the United States, Australia, New Zealand, Morocco and several European countries such as Austria, the Netherlands, Denmark, Finland, Ireland, Italy and Germany.

To design and implement the TCF effectively and efficiently, Denny outlined 4 policy recommendations for the DGT. First, optimising the coretax system by incorporating features for TCF submission and monitoring.

Second, expanding the use of XBRL to enhance TCF effectiveness. Third, strengthening real-time tax data integration. Fourth, collaborating with third-party TCF software providers, similar to the tax application service provider (penyedia jasa aplikasi perpajakan/PJAP in Indonesian) scheme.

He also suggested 2 information technology designs for efficient TCF implementation by taxpayers, including integrating enterprise resource planning (ERP) systems with tax software and adopting dedicated TCF software integrated with the DGT.

Meanwhile, Fannany Priambodo Mukti, Senior Expert IT Analyst at the DGT, Ministry of Finance, stated that Indonesia’s tax administration continues to move toward digitalisation. From initially relying on paper-based processes, the system is now transitioning to fully electronic operations.

Fannany affirmed that the government remains committed to keeping pace with digital developments, as reflected in ongoing tax technology reforms. These include the provision of electronic services, such as web-based e-filing, e-SPT, CRM and the coretax system.

“We strive to achieve a higher level of tax administration maturity,” he concluded. (rig)