Simplified Tax Penalty Payment
Indonesia Directorate General of Taxes · Indonesia · 2022
Summary
Reducing the administrative friction of paying a tax penalty had a larger effect than deterrence messaging alone. The billing code in the simplification letter let taxpayers pay in one step instead of navigating the full payment portal. Lowering the cost of compliance turns out to be at least as effective as increasing the perceived cost of non-compliance.
Research question
"Does simplifying the tax penalty payment process increase on-time settlement?"
Methodology
Intervention
Three arms: deterrence letter, information letter, simplification letter (with billing codes removing friction)
Assignment
Randomized controlled trial (individual taxpayer)
Sample size
10,000+ individual taxpayers
Primary outcome
Timely penalty settlement rate
Effect estimate
Simplification arm: +32% timely settlement vs. control; Deterrence: +27%
Decision
Simplification and deterrence letters both adopted
Result
Positive
Simplification arm: +32% timely settlement vs. control; Deterrence: +27%
Evidence strength
Strong
Randomized controlled trial with large sample.
Replication status
Open for replication
Institution
Indonesia Directorate General of Taxes
Location
Indonesia
Year
2022
Policy area
Tax & Revenue
Mechanism
Simplification