Income Tax Withholding Needs Overhaul Amid Coretax Implementation, Says Taxpayer Group

The Taxpayer Community of Indonesia (Masyarakat Pembayar Pajak Indonesia) is advocating for a significant overhaul of the current income tax (PPh) withholding system. This call for reform is directly linked to the ongoing implementation of the Coretax system, a data-centric approach to taxation.

According to the community, the Coretax system, which leverages extensive data to manage tax affairs, renders traditional withholding mechanisms obsolete. They argue that the government's enhanced data capabilities under Coretax mean it can more effectively track and collect taxes, reducing the reliance on employers or other entities withholding income at the source.

This proposal suggests a fundamental shift in how income tax is collected in Indonesia. By moving away from or significantly modifying the withholding system, the government could potentially streamline tax administration and collection processes, making them more efficient and transparent, especially as the Coretax infrastructure matures.