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Building capacity and ensuring timely tax returns

Working with the Indonesian Tax Authority (Direktorat Jenderal Pajak, or DJP) on our second project together, we ran our largest randomised controlled trial with 11.2 million taxpayers. The aim was to encourage submissions of annual tax returns at least two weeks before the deadline. In previous years the online filing system crashed and there were long queues at local tax offices for manual filing because many taxpayers filed at the last minute. This situation can erode tax morale and negatively impact tax revenue.

Six weeks before the filing deadline in 2018, we tested six different email messages against a ‘no email’ control. These messages were co-designed with representatives from four DJP directorates, and most used very different language to conventional taxpayer communication in Indonesia, which tends to focus on regulations.

Our best performing message highlighted that early filing avoids problems, with a link to a website where taxpayers could choose a filing date and receive reminders in the run-up. Preliminary analysis indicates that it increased early filing by seven per cent and overall filing by two per cent. It also brought forward an extra USD 1.93 million in tax payments at the point of filing, equivalent to USD 13.53 million if scaled
to the whole sample.

This was part of a wider programme of work, supported by the Global Innovation Fund, to build behavioural insights and evaluation capacity with governments in Indonesia, Guatemala and Bangladesh.

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