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The Impact of Tax Reform on Tax Ratios: A Comparative Analysis of the Transition from the Official Assessment System to the Self-Assessment System in Indonesia and Selected Asian Countries

Author

Listed:
  • Yossinomita Yossinomita
  • Rina Hartanti
  • Rosmeli
  • Junaidi Junaidi
  • Fathiyah Fathiyah
  • Arna Suryani

Abstract

This study examines Indonesia’s transition from the Official Assessment System (OAS) to the Self-Assessment System (SAS) and compares it with India, Malaysia, and the Philippines. Understanding these shifts is crucial for designing adaptive tax policies, as tax ratios reflect fiscal health. Using a quantitative approach, this research analyzes pre- and post-reform tax ratio data and applies the Granger Toda-Yamamoto methodology to explore causal relationships between tax reforms, tax ratios, inflation, and exchange rates. The findings highlight varied tax reform effectiveness. Indonesia’s tax ratio declined from 22.0% in 1981 to 8.3% in 2000, recovered to 11.6% in 2022, then dropped to 10.3% in 2023. India’s GST in 2017 led to fluctuations, with the tax ratio at 12.1% in 2023. Malaysia’s SAS adoption in 2001 increased the tax ratio to 17.8%, but it fell to 10.9% in 2020 due to COVID-19 before rebounding to 14.1% in 2023. The Philippines maintained a stable upward trend, reaching 15.7% in 2023. Granger Toda-Yamamoto analysis reveals macroeconomic interdependencies: in Indonesia, exchange rates significantly impact tax ratios (p = 0.0123); in Malaysia, exchange rates affect tax ratios (p = 0.0087); in India, tax reforms influence inflation (p = 0.0579), with bidirectional links between inflation and exchange rates (p = 0.0298, p = 0.0186); and in the Philippines, tax ratios impact inflation (p = 0.0002), while tax reforms affect both inflation (p = 0.0571) and exchange rates (p = 0.0009). These findings provide empirical insights into tax reform effectiveness and macroeconomic interactions. The study underscores the need for targeted policies to enhance tax compliance, revenue collection, and fiscal resilience, offering valuable recommendations for policymakers, tax authorities, and academics in developing competitive and adaptive tax systems.

Suggested Citation

  • Yossinomita Yossinomita & Rina Hartanti & Rosmeli & Junaidi Junaidi & Fathiyah Fathiyah & Arna Suryani, 2025. "The Impact of Tax Reform on Tax Ratios: A Comparative Analysis of the Transition from the Official Assessment System to the Self-Assessment System in Indonesia and Selected Asian Countries," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 11(2), pages 282-305.
    • Handle: RePEc:aiy:jnljtr:v:11:y:2025:i:2:p:282-305
    DOI: https://doi.org/10.15826/jtr.2025.11.2.202
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    References listed on IDEAS

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    1. Renato E. Reside, Jr. & Lee Burns, 2016. "Comprehensive Tax Reform in the Philippines: Principles, History and Recommendations," UP School of Economics Discussion Papers 201610, University of the Philippines School of Economics.
    2. Andrew Okello, 2014. "Managing Income Tax Compliance through Self-Assessment," IMF Working Papers 2014/041, International Monetary Fund.
    3. Ernesto Zangari & Antonella Caiumi & Thomas Hemmelgarn, 2017. "Tax Uncertainty: Evidence and Policy Responses," Taxation Papers 67, Directorate General Taxation and Customs Union, European Commission.
    4. Martina Beretta & İrem Güçeri & Katrine Jakobsen, 2023. "What drives major tax reform? Implications for taxing the rich," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 39(3), pages 617-629.
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    Keywords

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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