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THE EFFECT OF TAX DIGITALIZATION AND THE LEVEL OF TAX
UNDERSTANDING ON INDIVIDUAL TAXPAYER REPORTING
COMPLIANCE AT THE CILEGON PRIMARY TAX OFFICE
Erlina Sari Pohan .
Yongky Rangga Yuda Nugraha .
Alya Tiara Safitri .
erlinasaripohan@gmail.
Universitas Al-Khairiyah yongkyrangga@upnvj.
Universitas Pembangunan Nasional Veteran Jakarta alyatiarasafitri@gmail.
Universitas Al-Khairiyah Abstract Tax compliance refers to the condition in which taxpayers fulfill and comply with their tax obligations and exercise their tax rights in accordance with the applicable tax regulations.
Taxpayer reporting compliance is one of the most important keys to maximizing state revenue.
Although the number of registered individual taxpayers has increased each year, compliance with the submission of Annual Tax Returns (SPT) by individual taxpayers continues to One of the contributing factors is the low level of understanding of tax systems, regulations, and Although the number of registered taxpayers has increased, not all taxpayers consistently fulfill their tax obligations.
One contributing factor is changes in employment status or retirement, which may result in a taxpayer identification number (TIN) becoming inactive.
In addition, some taxpayers still perceive that tax reporting obligations are entirely the responsibility of their employers.
This misconception is primarily due to a lack of understanding of changes in the tax system.
This study aims to examine the effect of tax digitalization and the level of tax understanding on individual taxpayer reporting compliance.
The research employs a quantitative method using primary data collected through Likert-scale questionnaires.
The sample consists of 100 individual taxpayers who submitted their Annual Tax Returns at the Cilegon Primary Tax Office (KPP Pratama Cilego.
, selected using an incidental sampling technique.
The results indicate that both partially and simultaneously, tax digitalization and the level of tax understanding have a significant effect on individual taxpayer reporting Keywords: Individual Taxpayer Reporting Compliance.
Level of Tax Understanding.
Tax Digitalization INTRODUCTION According to the latest Law on General Provisions and Tax Procedures (KUP La.
, namely Law No.
7 of 2021 on the Harmonization of Tax Regulations (HPP La.
which is currently in effect, tax is defined as a mandatory contribution to the state owed by individuals or entities, which is enforceable under the law, without direct compensation, and is used to meet the needs of the state for the greatest prosperity of the people.
Tax compliance refers to a condition in which taxpayers fulfill and comply with their tax obligations while exercising their tax rights.
Taxpayer compliance is one of the most important keys to maximizing tax revenue.
One of the tax collection systems implemented is the Self-Assessment System, under which taxpayers are entrusted with determining the amount of tax they owe in order to fulfill their obligations properly.
To support this system, a wellorganized, simple, and easily understandable tax administration is required to enhance taxpayer Tax revenue in Indonesia generally experiences instability due to low taxpayer compliance, particularly resulting from a lack of knowledge and understanding regarding tax payment and reporting obligations, as illustrated in figure 1 below:
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Figure 1.
Online Annual Tax Return Reporting Compliance of Individual Taxpayers at the Cilegon Primary Tax Office (KPP Pratama Cilego.
, 2020Ae2023 Source: KPP Pratama Cilegon .
The figure 1 above shows that the number of registered individual taxpayers has increased each year.
However, the compliance of individual taxpayers in submitting their Annual Tax Returns (SPT) online has fluctuated.
In 2021, the number of individual taxpayers who submitted their Annual Tax Returns increased by 14.
63%, reaching 43,334 taxpayers, or 28% of the total registered individual taxpayers.
However, in 2022, this number decreased by 86%, with only 36,024 individual taxpayers, or 22%, submitting their Annual Tax Returns.
Subsequently, in 2023, there was a slight increase of 0.
82%, bringing the number of individual taxpayers who filed their Annual Tax Returns to 36,319, representing 21% of the total registered individual taxpayers.
Nevertheless, the increase in 2023 was still unable to surpass the growth achieved in Although the number of registered taxpayers continued to rise, not all taxpayers consistently fulfilled their tax obligations.
One contributing factor is changes in employment status or retirement, which may result in a Taxpayer Identification Number (NPWP) becoming In addition, there is still a perception among some taxpayers that tax reporting obligations are entirely the responsibility of their employers.
This perception is largely caused by a lack of understanding regarding changes in the tax system.
With the advancement of technology, the Directorate General of Taxes has undertaken various efforts to increase tax revenue by creating new innovations in the digital era through the provision of digital services .
ax digitalizatio.
, namely the Coretax system.
This digitalization supports good governance and enhances the quality of services provided to the Through this online-based system, data that has been entered can be easily reviewed and monitored using taxpayers' own computers.
Although the implementation of this digital system has provided convenience for taxpayers, many taxpayers still experience difficulties in using it, particularly those who lack an understanding of tax-related technology or do not know how to file and pay their taxes online.
As a result, this can reduce taxpayer compliance.
This issue has attracted particular attention from the tax sector in efforts to improve tax reporting compliance.
This is because neglecting the obligation to submit an Annual Tax Return (SPT) may result in administrative penalties for taxpayers.
Furthermore, if the target for tax return submissions is not achieved, it may negatively affect the organizational performance assessment of the Cilegon Primary Tax Office (KPP Pratama Cilego.
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the compliance of individual taxpayers in submitting their Annual Tax Returns at the Cilegon Primary Tax Office is essential to promote a more effective fulfillment of tax obligations.
Based on the explanation above, taxpayer compliance is influenced not only by tax digitalization but also by the level of tax understanding.
The higher the level of taxpayers' understanding, the easier it is for them to comprehend tax regulations and fulfill their tax Therefore, understanding is a process that develops from an individual's In other words, a good understanding of taxation can lead to taxpayers being more compliant with their tax obligations (Dewi, 2.
The complexity of tax regulations often leads to misunderstandings in their implementation.
Although the tax system has been digitized, concerns regarding the security of personal data during online tax filing remain an obstacle.
good understanding of taxation is essential for every taxpayer because it helps prevent errors in paying and reporting taxes.
Several previous studies have reported inconsistent findings.
The study conducted by Sofya .
found that tax digitalization has a significant and positive effect on the reporting compliance of individual taxpayers at the Solok City Primary Tax Office (KPP Pratama Kota Solo.
This finding demonstrates that tax digitalization can facilitate taxpayers in filing their tax returns, thereby encouraging greater taxpayer compliance.
Meanwhile, the study by Fitrianti .
found that tax digitalization through the eFiling service does not affect taxpayer compliance.
This is because taxpayers do not fully understand the e-Filing system, including knowledge of the applicable regulations.
Consequently, taxpayer compliance with existing regulations tends to be low when their knowledge of digital tax services is limited, and vice versa.
Furthermore, the study by Amin .
found that tax knowledge and understanding have a positive effect on taxpayer compliance.
When taxpayers possess extensive knowledge of taxation, they are more likely to develop positive attitudes toward the tax system.
Such attitudes can encourage taxpayers to comply with their tax obligations.
In contrast, the study by Kusuma and Wulandari .
found that the level of tax understanding has a positive but insignificant effect on the compliance of individual taxpayers in Semarang City.
This means that a higher level of tax understanding does not necessarily influence the compliance level of individual taxpayers in Semarang City.
Therefore, the objective of this study is to examine the effect of tax digitalization and the level of tax understanding on the reporting compliance of individual taxpayers.
LITERATURE REVIEW
Taxation According to Article 1 Paragraph 1 of Law Number 28 of 2007 concerning the Third Amendment to Law Number 6 of 1983 on General Provisions and Tax Procedures .
ommonly referred to as the KUP La.
, tax is a mandatory contribution to the state owed by individuals or entities, which is enforceable by law, without direct compensation, and is used for state purposes to achieve the greatest prosperity of the people.
According to IlmaAonun .
, tax is a contribution collected by the government from the public and is obligatory in nature, meaning it can be enforced by law.
Tax Digitalization Tax digitalization is an innovation in tax administration services that provides convenience for taxpayers in accessing tax reporting and payment through online tax service applications or internet-based platforms (Hajering, 2.
Tax digitalization aims to improve service quality, reduce costs, and enhance tax compliance.
To achieve these objectives, the Directorate General of Taxes has introduced a tax modernization concept through various electronic tax applications.
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taxpayers (Amalia, 2.
Taxpayers can access various digital services through a single The indicators of online tax digitalization include:
Digital-based tax service applications.
Ease of access to tax information.
Innovation in digital services.
Level of Tax Understanding Understanding is a term derived from the word Auunderstand.
Ay According to the Indonesian Dictionary (KBBI), it encompasses knowledge, opinions, thoughts, perspectives, views, and the ability to comprehend and recognize something accurately (Lubis, 2.
Tax understanding refers to the process by which taxpayers comprehend and recognize tax regulations, tax laws, and tax procedures, and apply them in tax-related activities such as tax payment, tax return filing, and other tax obligations.
According to Christian and Jenni .
, the indicators used to measure taxpayers' understanding in carrying out their obligations include:
The filer possesses a valid identity.
The filer's identity is accurate and authentic.
Understanding of the Indonesian tax system.
Understanding of general tax provisions.
Awareness of tax return filing deadlines.
Understanding of tax procedures.
Understanding of tax functions.
Understanding that tax collection is used to finance the state.
Understanding of tax sanctions.
The need for tax socialization and education for the wider community.
Individual Taxpayer Reporting Compliance Taxpayer compliance can be defined as the willingness of taxpayers to obey and comply with their tax rights and obligations in accordance with applicable laws and regulations.
According to Waskito .
, taxpayer compliance refers to the fulfillment of tax obligations by taxpayers as a contribution to national development through timely tax payment and According to Lubis .
, the indicators of taxpayer reporting compliance include:
Taxpayers submit their tax returns on time.
Taxpayers calculate their taxes independently.
Taxpayers complete tax forms correctly.
Taxpayers fill out tax returns in accordance with applicable regulations.
Taxpayers do not have outstanding tax arrears.
Theory of Planned Behavior (TPB) The Theory of Planned Behavior (TPB), popularized by Ajzen .
, explains that an individual's behavior is influenced by their intention to engage in a particular behavior.
This intention is shaped by several factors, including attitudes, normative beliefs, and perceived behavioral control.
Attitudes refer to an individual's evaluation of the likelihood and consequences of engaging in a behavior, while normative beliefs arise from social influences and motivation.
Perceived behavioral control refers to an individual's perception that certain factors may facilitate or hinder a behavior, depending on how those factors are perceived (Tanno, 2.
The Theory of Planned Behavior is relevant for explaining individual taxpayer reporting This theory assumes that individuals often act or behave according to what they understand (IlmaAonun, 2.
For example, tax digitalization, through the implementation of a more user-friendly tax system, enables taxpayers to easily report and fulfill their tax obligations This can positively influence taxpayers' attitudes and enhance their understanding of tax
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obligations, such as tax reporting and tax payment, thereby increasing confidence and reducing Consequently, compliant taxpayers are those who possess a strong intention to fulfill their tax obligations accurately and on time.
Research Hypothesis : Tax Digitalization Has an Effect on Individual Taxpayer Reporting Compliance.
: The Level of Tax Understanding Has an Effect on Individual Taxpayer Reporting Compliance.
: Tax Digitalization and the Level of Tax Understanding Have an Effect on Individual Taxpayer Reporting Compliance.
Figure 2.
Research Framework Tax Digitalization (X.
Level of Tax Understanding Individual Taxpayer Reporting Compliance.
(Y)
(X.
METHODS
Research Design The method used in this study is quantitative.
Based on the type of data, this research is classified as a causal associative study.
The population used in this study consists of individual taxpayers who submitted their Annual Tax Returns (SPT) at the Cilegon Primary Tax Office (KPP Pratama Cilego.
in 2023, totaling 36,319 taxpayers, with a margin of error .
of 10%.
The number of samples to be selected is as follows:
The research method employed in this study is quantitative.
Quantitative research methods can be defined as research methods based on the philosophy of positivism, used to examine specific populations or samples Sugiyono .
Based on the type of data, this study is classified as a causal associative study, which aims to determine the cause-and-effect relationship between two or more variables, namely the independent variable and the dependent In terms of its object of study, this research is categorized as field research, in which the researcher uses questionnaires as the primary instrument for collecting the necessary data.
Population and Sample The population in this study consists of individual taxpayers who submitted their Annual Tax Returns (SPT) at the Cilegon Primary Tax Office (KPP Pratama Cilego.
in 2023, totaling 36,319 taxpayers.
The sampling technique used in this study was incidental sampling, in which respondents were selected based on chance encounters.
This sampling technique relies on the accidental availability of individuals who meet the criteria of the study.
n = 1 36.
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ycu= ycu= ycu= 1 36.
1 363,19
364,19
= 99,7254180 the sample size was rounded to 100 respondents.
Based on the Slovin formula calculation, a sample of 100 respondents was obtained.
The sampling technique used was non-probability sampling, a technique that does not provide equal opportunities for all members of the population to be selected as samples (Muin, 2.
Specifically, incidental sampling was employed, in which respondents were selected based on chance encounters, provided they met the characteristics required for the study (Sugiyono.
Data Collection Techniques and Instrument Development The study utilized primary data, which were collected through Likert-scale questionnaires distributed online via Google Forms.
In addition, secondary data were obtained from scientific journals and books used as references (Widodo, 2.
Data Analysis Techniques The data analysis techniques employed in this study included descriptive analysis, instrument testing, classical assumption testing, multiple linear regression analysis, and hypothesis testing using SPSS version 25.
RESULTS AND DISCUSSION
Instrument Testing Table 1.
Tax Digitalization Validity Test Results (X.
No.
Item
Description yeeyeOyeOyeiyenyeayeO
yeeyeiyeCyeEyeIyes ycU1
ycU10
0,888
0,864
0,848
0,907
0,879
0,925
0,903
0,887
0,902
0,879
0,1966
0,1966
0,1966
0,1966
0,1966
0,1966
0,1966
0,1966
0,1966
0,1966
Valid Valid Valid Valid Valid Valid Valid Valid Valid Valid Source: Processed Data Based on the table above, the r-table value is 0.
1966, which was obtained at a significance level of 0.
Since the calculated correlation coefficient .
-calculate.
for each item is greater than the r-table value, it can be concluded that all statement items are valid.
Table 2.
Validity Test Results of the Level of Tax Understanding (X.
No.
Item
yeeyeOyeOyeiyenyeayeO
0,830
0,860
0,681
0,778
0,871
0,890
0,882
0,873
yeeyeiyeCyeEyeIyes 0,1966 0,1966 0,1966 0,1966 0,1966 0,1966 0,1966 0,1966 Description Valid
Valid
Valid
Valid
Valid
Valid
Valid
Valid
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ycU10
0,879
0,1966
Valid
0,871
0,1966
Valid Source: Processed Data Based on the table above, the r-table value is 0.
1966, which was obtained at a significance level of 0.
Since the r-calculated value for each item exceeds the r-table value, it can be concluded that all statement items are valid.
Table 3.
Validity Test Results of Individual Taxpayer Reporting Compliance (Y) No.
Item
yeeyeOyeOyeiyenyeayeO
Description yeeyeiyeCyeEyeIyes ycU1
0,833
0,916
0,1966
0,1966
Valid
Valid
0,890
0,1966
Valid
0,884
0,1966
Valid
0,798
0,1966
Valid
0,929
0,801
0,918
0,1966
0,1966
0,1966
Valid
Valid
Valid
0,937
0,1966
Valid
ycU10
0,878
0,1966
Valid Source: Processed Data Based on the table above, the r-table value is 0.
1966, which was obtained at a significance level of 0.
Since the r-calculated value for each item is greater than the r-table value, it can be concluded that all statement items are valid.
Table 4.
Reliability Test Results No.
Item
Nilai CronbachAos Alpha
0,970
0,954
0,967
Nilai Standar CronbachAos Alpha Description Reliabel Reliabel Reliabel Source: Processed Data Based on the table above, the reliability test results indicate that all variables have sufficiently high Cronbach's Alpha values, namely above 0.
Therefore, it can be concluded that all questionnaire variables are reliable and suitable for use as measurement instruments.
Classical Assumption Test Results Normality Test Based on the test conducted using the Kolmogorov-Smirnov method, the Asymp.
Sig.
value obtained was 0.
This indicates that the significance value is greater than 0.
meaning that the residual values or data are normally distributed.
Multiple Linear Regression Analysis Results Multiple linear regression analysis was used to determine whether there is an effect of two or more independent variables (X) on the dependent variable (Y).
Based on the data analysis, the following regression equation was obtained Y = 3.
333 X1 0.
585 X2.
From this regression equation, the following conclusions can be drawn :
The constant value is 3.
This indicates that if both independent variables .
ax digitalization and the level of tax understandin.
are equal to zero or remain constant, individual taxpayer reporting compliance will increase by 3.
The regression coefficient for variable XCA .
ax digitalizatio.
333, indicating a positive effect.
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(XCA) will increase individual taxpayer reporting compliance (Y) by 0.
333, assuming that the other variables remain constant.
The regression coefficient for variable XCC .
evel of tax understandin.
indicating that every one-unit increase in the level of tax understanding (XCC) will increase individual taxpayer reporting compliance (Y) by 0.
585, assuming that the other variables remain constant.
Hypothesis Testing Results Table 5.
t-Test (Partial Tes.
Results Model (Constan.
Coefficientsa Unstandardized Coefficients Standardized Coefficients Std.
Error Beta Dependent Variable: Y Sig.
Source: Processed Data The t-test results presented in the table above are used to determine the partial significance of each independent variable on the dependent variable (Zahriyah, 2021, p.
Based on the SPSS analysis above, the tax digitalization variable has a t-value of 358, which is greater than the t-table value of 1.
984, with a significance level of 000 < 0.
Based on these results, the hypothesis stating that there is an effect of XCA .
ax digitalizatio.
on Y .
ndividual taxpayer reporting complianc.
is Therefore.
HCA is accepted and HCA is rejected.
Based on the SPSS analysis above, the level of tax understanding variable has a tvalue of 7.
087, which is greater than the t-table value of 1.
984, with a significance level of 0.
000 < 0.
Based on these results, the hypothesis stating that there is an effect of XCC .
evel of tax understandin.
on Y .
ndividual taxpayer reporting complianc.
is accepted.
Therefore.
HCC is accepted and HCA is rejected.
Table 6.
F-Test Results (Simultaneous Tes.
ANOVAa Model Regression Sum of Squares Mean Square Residual Total Sig.
Dependent Variable: Y Predictors: (Constan.
X2.
X1 Source: Processed Data Based on the data processing results using SPSS, the calculated F-value (FCiACuACo.
was 613, which is greater than the F-table value of 3.
Therefore, it can be concluded that tax digitalization and the level of tax understanding simultaneously have a significant effect on individual taxpayer reporting compliance.
Thus, the third hypothesis (HCE) is accepted.
Table 7.
Coefficient of Determination Test Results Model Summary Model R Square Predictors: (Constan.
X2.
X1 Adjusted R Square Std.
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Source: Processed Data Based on the results of the coefficient of determination test, the R Square value obtained 795 or 79.
This indicates that 79.
5% of the variation in individual taxpayer reporting compliance can be explained by the two independent variables, namely tax digitalization and the level of tax understanding.
The remaining 20.
5% is explained by other variables that were not included in this study.
Discussion The Effect of Tax Digitalization on Individual Taxpayer Reporting Compliance The results of the partial t-test indicate that the tax digitalization variable has a significance value of 0.
000 at a significance level of 0.
Based on these results, it can be concluded that tax digitalization has a significant effect on individual taxpayer reporting The findings of this study are consistent with the research conducted by Frederica .
, which concluded that tax digitalization has a partial and significant effect on individual taxpayer compliance.
This means that the better the tax digitalization process, the higher the level of taxpayer compliance.
Furthermore, this finding is in line with the Theory of Planned Behavior, which states that an individual's behavior is influenced by the intention to engage in a particular behavior, and that intention is shaped by factors such as attitudes, normative beliefs, and perceived behavioral control.
Through a more user-friendly tax system, taxpayers can more easily report and fulfill their tax obligations online, thereby positively influencing their attitudes toward tax These findings imply that the implementation of digital tax systems such as electronic tax reporting can enhance taxpayer compliance through ease of access, time efficiency, and the simplification of tax administration processes.
The results of this study reinforce the theory that the use of information technology in tax administration can enhance taxpayer compliance.
The Effect of the Level of Tax Understanding on Individual Taxpayer Reporting Compliance The results of the partial t-test for the level of tax understanding variable show a significance value of 0.
000 at a significance level of 0.
Based on these results, it can be concluded that the level of tax understanding has a significant effect on individual taxpayer reporting compliance.
The findings of this study support the research conducted by Halimatusadiah .
, which concluded that the level of tax understanding has a positive and significant effect on taxpayer compliance.
Tax understanding is a process through which taxpayers comprehend tax regulations.
When taxpayers possess a higher level of tax understanding, their level of compliance is also likely to increase.
A good understanding of existing tax regulations and procedures, as well as tax obligations such as filing tax returns and paying taxes, helps increase confidence and reduce According to the Theory of Planned Behavior, this suggests that the higher the level of tax understanding, the stronger the taxpayer's intention to comply with tax obligations.
These findings indicate that the better a taxpayer's understanding of tax regulations, procedures, rights, and obligations, the higher their level of compliance in fulfilling tax reporting obligations.
Adequate understanding helps taxpayers avoid reporting errors and reduces non-compliance stemming from a lack of knowledge regarding tax regulations.
This research strengthens the theory that tax knowledge and understanding are important factors influencing taxpayer compliance behavior.
The Effect of Tax Digitalization and the Level of Tax Understanding on Individual Taxpayer Reporting Compliance The results of the simultaneous F-test indicate that tax digitalization and the level of tax understanding jointly have a significant effect on individual taxpayer reporting compliance.
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with a significance value of 0.
000 at a significance level of 0.
In addition, the coefficient of determination test results show that the combined influence of these two variables is 0.
795 or This means that 79.
5% of the variation in individual taxpayer reporting compliance can be explained by tax digitalization and the level of tax understanding, while the remaining 20.
is influenced by other factors not examined in this study.
CONCLUSION
Tax digitalization has a significant effect on individual taxpayer reporting compliance at the Cilegon Primary Tax Office (KPP Pratama Cilego.
This study demonstrates a positive relationship between tax digitalization and individual taxpayer reporting compliance.
The level of tax understanding also has a significant effect on individual taxpayer reporting compliance at the Cilegon Primary Tax Office.
The findings successfully demonstrate a positive relationship between the level of tax understanding and individual taxpayer reporting Furthermore, the two independent variables tax digitalization and the level of tax understanding jointly .
affect the dependent variable, namely individual taxpayer reporting compliance.
Recommendations The Cilegon Primary Tax Office (KPP Pratama Cilego.
should enhance its socialization and outreach efforts regarding the ease and benefits of digital tax reporting, as well as provide clear and easy-to-understand guidance for taxpayers.
The level of taxpayers' understanding of tax regulations is still relatively low.
Therefore.
KPP Pratama Cilegon should be more active in educating taxpayers through outreach and socialization programs.
Taxpayers are also encouraged to take advantage of the educational programs organized by the Directorate General of Taxes (DGT) or KPP Pratama Cilegon to improve their understanding and ensure timely submission of their Annual Tax Returns (SPT).
Considering that tax digitalization is not yet fully understood and that the level of tax understanding remains relatively low.
KPP Pratama Cilegon should provide more practical guidelines and enhance both direct and online consultation services to facilitate taxpayers in fulfilling their tax obligations.
Future researchers are encouraged to add or replace variables, such as tax socialization, taxpayer satisfaction, or the whistleblowing system.
In addition, they may use a larger sample size, for example, 395 respondents from a population of 36,319 taxpayers with a margin of error of 5%, in order to obtain more specific and representative results.
REFERENCES