International Engagement - Indonesia Building a better future for Indonesia

The ATO has a fulltime officer, Steve Dardo, posted in Jakarta. His objective is to support the Indonesian tax office (Directorate General of Taxes, DGT) to effectively administer tax and to facilitate joint projects between ATO & DGT. Steve works closely with the Australian Indonesian Partnership and Economic Governance (AIPEG), Foreign Affairs and Trade and other Australian government agencies to help Indonesia build a better future.

Indonesia, with a population of over 250 million, is facing many significant and complicated challenges. Over the next 10 years, the middle class (and number of tax payers) will rapidly expand from some 25 million to 125 million. Current legislation, business practises and IT systems are not equipped to handle this rapid growth. Combine this with poor taxpayer education, geographical challenges of operating across more than 17,000 islands and cultural issues, it is imperative that we help our largest neighbour administer tax effectively so it can support its own citizens in the future. Outlined below are some of the specific challenges and activities Steve Dardo is driving to support our colleagues in Indonesia.

ATO, AUSTRAC & AIPEG fostering greater collaboration between Indonesian agencies.

The DGT and PPATK (the agency equivalent to AUSTRAC) rarely collaborate or share information with each other. ATO, AUSTRAC & AIPEG brought the DGT & PPATK together at a workshop to demonstrate how ATO/AUSTRAC work together and to share the Wickenby experience. At the conclusion of the workshop the DGT & PPATK agreed on 21 action items to move towards greater collaboration.

Guiding business transformation.

The Business Transformation Team in DGT just finished mapping over 500 business process over the last 2 years. Now they need to prioritise, analyse and redesign, however, they don't have the capability to undertake these tasks effectively. Our objective is help them develop and apply those capabilities to deliver some tangible improvements to DGT operations.

Selecting candidates for secondments to Australia

In the previous 9 months we have sent 6 secondees from DGT to work in the ATO for 3 month periods in specialised areas including transfer pricing, data analytics and web development. Over the next 6 months we hope to send another 3 secondees to the Contact Centres. This activity is proving to be a very effective capability building tool and we really appreciate the time and effort invested by those ATO areas that are hosting the secondees.

Over the years a number of DGT delegations have travelled to Australia to study various aspects of ATO operations. For the first time, we organised a delegation that consisted of representatives from 4 Indonesian government agencies to study 'co-design' and in particular the integrated tax design between ATO and Treasury. The ATO & Treasury hosts in Australia did a fantastic job of highlighting the benefits of co-design. Shortly after the delegation returned to Jakarta the DGT applied the co-design approach in a call centre pilot.

Business Continuity expert David Porter in action.

A fire in the DGT Head office in 2015 exposed the fact that the DGT had no business continuity capability, so the DGT asked us for assistance. In April we brought an expert from the ATO, David Porter, to assess the situation and provide tailored advice to the DGT. At the conclusion of the week David also delivered a workshop that helped the DGT come up with an action plan towards developing and implementing their own business continuity capability.

Expanding the call centre capability.

The call centre (there is only one) is currently very restricted in its operations, due to regulations. It only has scope to provide advice to taxpayers. They cannot register or update taxpayer details or collect debt. The leadership team in the call centre are proactive, progressive and keen to try new things. We recently secured approval for the call centre to pilot outbound calls and we are now helping them design the entire outbound campaign from scratch.

Consulting with the community.

For the call centre pilot outbound campaign, the DGT adopted the co-design approach and consulted with taxpayers on the draft scripting. This was the first time in the history of the DGT, that they actually consulted with taxpayers. The DGT found the process to be very insightful and useful and they consequently made significant changes to the original script. They now see value in using the co-design approach with future initiatives. Our longer term objective is to get a lot more functions transferred to the call centre that will deliver real improvements to revenue collection and broadening the tax base.

The pilot outbound campaign will be conducted in the Malang and Medang regions. Whilst in Malang, we took the opportunity to speak to the Regional Head and his leadership team. They told us that their local challenges are around understanding the tax gap, broadening the tax base and collecting revenue and requested our assistance. For the first time, we will now endeavour to work directly with a region, instead of the Head Office, to help the region deliver tangible improvements in tax administration.

Debt Collectors in Malang love the idea of shifting early intervention debt collection calls to the call centre.

We travelled to Malang and Madang to meet with Debt Collectors and Bailiffs and to help the call centre promote their pilot outbound campaign. They were very receptive to the pilot and they also shared with us some of the challenges they face in the course of collecting debt eg lack of data, poor quality data, no single source of truth for tax payer accounts, difficulties locating the right taxpayer and the physical dangers of meeting with tax payers to seize assets. In April 2016, two tax officers in Medang were murdered during a field visit.

Regulations prevent the delegation of duties.

The DGT is bound by legislation issued from government, regulations issued by the Minister of Finance and regulations issued by the Tax Commissioner. Sometimes the regulations conflict with each other and with legislation. The Tax Commissioner personally approves the regulations issued under his authority and there are lots! Every business process in the DGT is governed by a regulation. This means that a business process can only be changed by the Tax Commissioner. One such regulation states that Regional Heads must check and approve every single refund for their region. These are the Regional Heads (DC equivalents) of Malang (population of 17m) and Medang (population of 13m). In the photos above you will note the piles of files on their desks. They are just some of the approvals for refunds that they have to personally check and sign.

International tax cases/matters

I assist ATO officers in Australia with cases that involve tax payers operating across both tax jurisdictions. As a 'Competent Authority' I am authorised to share or receive information about tax payers so I can approach the DGT to discuss specific cases and ensure they are progressed towards a resolution. We are aslo supporting the DGT with broader set of international tax matters including the implementation of the 'Common Reporting Standard' and the BEPS Action Plan.

The Regional Head of Malang

The DGT are very grateful for the support they receive by the ATO in relation to study visits, secondees and providing experts and as a result we can see gradual improvements in DGT operations. Ongoing support from the ATO will be a key ingredient in the DGT's future success .

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