Marketplace Tax Reform Must Broaden Taxpayer Base, Not Hinder MSME Growth

The Chairman of the Indonesian Indigenous Entrepreneurs Association (HIPPI) for South Jakarta, Azka Aufary Ramli, considers the Directorate General of Taxes’ policy of appointing marketplaces as tax collectors to be an appropriate step in adapting the taxation system to the development of the digital economy. However, the success of this policy must not be measured solely by increased state revenue, but also by its ability to broaden the taxpayer base through the growth of businesses that are increasingly formal and competitive. Through a written statement today, Azka expressed the view that Indonesia still faces the structural challenge of a low level of business formalisation. Many MSMEs still lack proper bookkeeping, adequate business legality, and an understanding of tax administration. This condition is the root cause of the narrow national taxpayer base. “Indonesia discusses how to increase tax revenue too often, but has not sufficiently discussed how to enlarge the taxpayer base. The problem is not merely the rate or the collection mechanism, but the still low level of business formalisation,” said Azka. He added that HIPPI South Jakarta believes tax reform must be part of an economic development strategy, not just a fiscal instrument. Tax compliance should provide tangible benefits for business actors, such as easier access to financing, access to government procurement, investment opportunities, and opportunities to enter national and global industrial supply chains. “Tax compliance must be positioned as a business asset, not merely an administrative obligation. Compliant entrepreneurs must feel tangible benefits to develop their businesses,” Azka stressed. HIPPI South Jakarta also reminded that policy implementation must prioritise education, administrative simplification, and legal certainty so as not to create negative perceptions among growing MSMEs. “Tax reform must not succeed in increasing state revenue in the short term, but actually slow down the birth of new entrepreneurs. What Indonesia needs is more formal companies that are healthy, productive, and capable of creating jobs.” As a strategic partner of the government, HIPPI South Jakarta is ready to collaborate in improving tax literacy and business governance for MSMEs. According to Azka, the measure of reform success is not only an increase in the tax ratio, but also an increase in the number of formal companies capable of growing sustainably. “Our target must not stop at increasing the tax ratio. Equally important is increasing the number of formal businesses in Indonesia. When more MSMEs upgrade to become healthy and bankable companies, tax revenue will increase naturally and sustainably,” he concluded.