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Does Tax Simplification Motivate Small Businesses to be More Compliant? Evidence from a Regression Discontinuity in Indonesia

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  • Agung Satyadini
  • Arifin Rosid

Abstract

This research investigates how the tax simplification program in Indonesia affects tax compliance among small businesses, by employing a regression discontinuity design and examining various parameters of tax compliance. The results indicate that tax simplification does not significantly influence tax payment behaviour. However, it does have a positive effect on overall tax compliance, demonstrated by more frequent reporting and fewer penalties imposed. Analysis of heterogeneous treatment effects reveals considerable variation across geographic areas and internet access levels. Taxpayers in areas with decent internet access and near a tax office appear to benefit more from the program.

Suggested Citation

  • Agung Satyadini & Arifin Rosid, 2024. "Does Tax Simplification Motivate Small Businesses to be More Compliant? Evidence from a Regression Discontinuity in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 60(2), pages 217-238, May.
    • Handle: RePEc:taf:bindes:v:60:y:2024:i:2:p:217-238
    DOI: 10.1080/00074918.2023.2252746
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