Experts agreed that financial technology (Fintech) could improve tax compliance among the country’s 60 million small and medium enterprises (SMEs), which often complain about complex paperwork and ever-changing tax regulations.

Fintech offers a new solution to the age-old problem of tax collection from SMEs, which contribute a fraction to the national tax collection despite contributing up to 60 percent of the gross domestic product.

Recently, the Finance Ministry's taxation directorate general reported SMEs contributed less than 1 percent (Rp. 5.4 trillion) of the government tax collection target of Rp1.42 quadrillion for 2018.

Furthermore, the directorate reported only 1.69 million (3 percent) out of 60 million SMEs were registered taxpayers as of December last year.

Fintech companies like Harmoni, an accounting software start-up based in Jakarta, may help alleviate the problem by simplifying tax paperwork for individual businesses.

“The tax process has three phases: calculate, pay and report. Fintech helps by handling either one or all three of these phases,” said Harmoni chief executive officer Andoko Chandra.

Tax office spokesman Hestu Yoga Saksama concurred on the regulatory benefits of fintech in tax collection saying fintech could provide, for example, better regulation of investors and debtor SMEs.

https://www.thejakartapost.com/news/2019/01/14/fintech-can-improve-sme-tax-compliance-experts.html