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Tax & RevenueSimplificationPositive

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

Featured in evidence syntheses

Other trials of this mechanism

Cite this entry

Indonesia Directorate General of Taxes. (2022). Simplified Tax Penalty Payment. The Experiment Society Registry. Retrieved from https://www.experimentsociety.org/registry/indonesia-tax-penalty-simplification (primary report: https://www.sciencedirect.com/science/article/pii/S0167268124002191)

Citation network

Cited by 2 other entries in the registry

Cross-references

Adjacent experiments — same domain, parallel pilots, or alternative mechanisms.

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Open for replication

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