The Potential of Blockchain Technology to Mitigate Tax Avoidance

Abstract

Tax avoidance is a major concern for the Indonesian economy and tax system. The tax system in Indonesia is governed by a complex legal and regulatory framework, which includes several ASEAN nations that have adopted blockchain technology. This study aims to investigate the opportunities and challenges of implementing blockchain technology to reduce tax avoidance practices in Indonesia, and how can the adoption of this technology enhance the transparency and accountability of the tax system compared to ASEAN countries that have already done so. The research methodology uses qualitative descriptive analysis with a case study approach to examine how blockchain technology is being implemented in the tax systems in Indonesia. The study examines case studies from ASEAN nation's tax systems that have implemented the technology to determine whether and how blockchain might successfully lessen tax avoidance methods used in Indonesia. Integrating blockchain technology into ASEAN tax systems can significantly improve tax management's accuracy, efficiency, and transparency. Despite blockchain's enormous potential, Indonesia faces several obstacles to its implementation, including a lack of knowledge and training among industry participants and tax authorities, a shortage of technological infrastructure, and the requirement to create regulations that encourage its adoption. Blockchain technology can streamline administrative procedures, enhance tax reporting, and facilitate automation through smart contracts in Indonesia's fiscal system.