New Coretax System: A Game-Changer or a Growing Pain?

Indonesia's tax administration is undergoing a significant transformation with the implementation of the Core Tax Administration System (Coretax). Effective from January 1, 2025, this initiative is spearheaded by the Ministry of Finance (MoF). Designed to simplify tax processes and unify multiple platforms, Coretax aims to ease compliance for taxpayers while giving the government a 360-degree view of the country’s tax landscape. 

This new system is expected to streamline tax administration, enhance data accuracy, and improve tax revenue collection. However, its implementation has not been without challenges, and businesses are already feeling the impact of ongoing system glitches. 

What is Coretax?

Coretax is an integrated system that unifies all tax administration processes, including: 

• Taxpayer registration (NPWP for individuals and businesses) 

• Tax return submissions 

• Payment processing 

• Audits and compliance monitoring 

By bringing these processes into a single digital platform, Coretax aims to automate compliance, reduce manual errors, and ensure real-time tax reporting. The Indonesian government has been working towards this transformation for years—starting with the digitisation of electronic KTPs (e-KTPs) for all Indonesian citizens, and now entering the second phase of synchronising tax data with national identity records. 

Regulatory Framework:

Coretax was founded under Presidential Regulation Number 40 of 2018, mandating a core tax system to enhance the Directorate General of Taxes' (DGT) IT infrastructure and data management.

Building upon this, the MoF issued Regulation No. 81 of 2024 (PMK-81) on October 18, 2024, to streamline various tax regulations in preparation for Coretax. This regulation, effective from January 1, 2025, revokes 42 existing regulations to harmonize procedures and emphasizes electronic channels for tax administration.  

Key Objectives of Coretax:

• Operational Efficiency: Automation of processes such as reporting, payments, and monitoring to reduce manual errors and accelerate workflows. 

• Transparency and Data Accuracy: Real-time processing of taxpayer data ensures accurate and up-to-date information, simplifying audits and reducing risks of fraud. 

• Taxpayer Convenience: Streamlined procedures and automated notifications make it easier for taxpayers to comply with their obligations. 

• Increased Tax Revenues: Enhanced data analytics help identify untapped tax opportunities, broadening the tax base. 

• Integration with National Systems: Seamless integration with systems like e-KTP, AHU (Administrative Law Administration) portal, and the national financial system facilitates comprehensive data sharing. 

• Compliance with International Standards: Alignment with global best practices enhances Indonesia's standing in the Ease of Doing Business index. 

Implications for Taxpayers:

While Coretax promises numerous benefits, the transition has presented temporary challenges. Notably, there have been reports of difficulties in issuing Tax Identification Numbers (NPWP) for companies and individuals due to data migration and system setup processes. The DGT has acknowledged these issues and is working to resolve them promptly.  

Looking Ahead:

The implementation of Coretax marks a pivotal step in building a modern and sustainable tax system in Indonesia. Despite initial challenges, this large-scale effort is expected to significantly improve tax administration in the long term, benefiting both taxpayers and the government. 

As the system stabilizes, taxpayers can look forward to a more efficient, transparent, and user-friendly tax administration experience. Staying informed and adapting to these changes will be crucial for businesses and individuals alike. 

At SAS, we are closely following these developments and assisting our clients in minimising the impact of Coretax-related delays. If you need guidance on your tax obligations, our team is here to help. 

Contact us today to ensure your tax compliance remains on track amid these changes.