Authors: Andi Mohammad Ilham and Andi Mohammad Johan*
Recently, Indonesia’s new Minister of Finance, Purbaya, declared that the establishment of the State Revenue Authority (SRA/BPN) would not happen immediately. He argued that he needs to previously maximize the performance of Directorate General of Taxes (DGT) and the Directorate General of Customs and Excise (DGCE) under his administration. This position is suggested if Purbaya needs to reassess the capacity of the finance institution, as the pre-creation and post-creation phases of the SRA represent critical stages in institutional transition.
Since the early 2000s, the debate over the appropriate level of autonomy for state revenue agencies has emerged as an important issue worldwide, with varying degrees of success and failure. From Latin America to Asia-Pacific countries, reform in institutional arrangement of tax administration body is functionally necessary both increasing public revenue and taxpayers’ compliance, with statistically expanding tax ratio. Therefore, the historical successes and failures of tax administration institutional shifts offer a key lens for understanding how each country develops policies to reform the autonomy of its state revenue authority.
The Transition of State Revenue Authority: A Defining Reform in Tax Administration
One cannot say with confidence that the transition toward State Revenue Authority will be smooth. Both positive outcomes and negative pitfall will face by the Government of Indonesia. From economic point of view, this plan to build state revenue authority is due to the need of the Government of Indonesia to raise its tax ratio. From fiscal perspectives, it is all about to expand tax compliance and improve the performance of tax administration. So, the outlook for policy trajectory of the pre-SRA and the post-SRA is crucial to the continuity for Indonesia’s tax reform, specifically reform in tax administration.
Scholars posit that a country’s inability, to both increase its tax ratio and reinforce tax compliance, necessitates comprehensive tax reform. This failure, they argue, stems from three core areas: tax law (policy), the political system (will & culture), and tax administration (implementation). As developing and transitional countries are more likely to be trapped in the complexity of tax laws, placing the focus heavily on tax legal reform. So, the transition of Indonesia’s State Revenue Authority is positioned as a critical component in tax administrative reform.
Making Sense the Structure: From Internal Department to Semi-Autonomous Body
Operationally speaking, there are 3 models in institutional arrangement for tax administration, which are in internal department under ministry of finance, semiautonomous body affiliated with ministry of finance by various degree of affiliation (SARA), and full autonomous model of tax authority (ARA). According to the 2012 ADB policy brief, Institutional Arrangements for Tax Administration in Asia and the Pacific, Indonesia is identified as having the least autonomous tax administration with minimal authority compared to other Asia-Pacific countries. Under this blueprint, the semi-autonomous model with an oversight board has been successful implemented in four Asian countries, China, Hong Kong, Malaysia, and Singapore, each demonstrating notable results. Following the adopted, three of these jurisdictions have maintained stable tax revenues of around 13%–14% of GDP.
Given this reality, the central question revolves around which independent institutional model aligns with Indonesia’s tax system characteristics and then is that such model would be able to elevate Indonesia’s tax ratio and expand Indonesia’s tax administration performance. In 2016, the draft revision of the KUP Law, on General Provisions and Procedures for Taxation, introduced a proposal to establish a semi-autonomous state authority (SARA). Scholars also suggested that semi-autonomous model is fit with Indonesia characteristics, which this institution will position equal to ministry level. By nature of structure type in institutional arrangement, it will point to the Unified Semi-Autonomous Body with formal board comprised of external official (USBB), with merging the Directorate General of Taxes (DGT), the Directorate General of Customs and Excise (DGCE), and the Directorate of Non-Tax State Revenue (NTSR Directorate).
Beware of Pitfalls and Strive for High Standards
In parallel with structural and institutional design, one variable will be significant to the progress of autonomous body tax authority. It is a strong and conducive legal, social, and political institution. This issue becomes crucial, unlike fully autonomous institutions, the SARA model is still influenced from equivalent-level bodies. Using semi-autonomous tax authority (SARA) model, different countries show a different outcome. For example, Kenya’s revenue authority transition experience has pitfall due to the persistent political interference and corruption.
From political mandate, Indonesia has secured its position to create state revenue authority, which emboldened in Prabowo Administration’s Government Work Plans (RKP) in 2025, under Presidential Decree (Perpres) No 79, 2025. Despite political approval, the strategic conducive institution is another setting more important. Singapore & Malaysia were successful in semiautonomous tax authority adaptation because realizing the importance of institutional capacity and enhancing continual institutional development. So, state revenue authority’s capacity institution is one thing that the Government of Indonesia need to make sure.
In other words, understanding and preparing the policy trajectory of pre-creation and post-creation of SRA are an imperative to get positive-sum game in institutional arrangement transition for Indonesia’s tax administration. Moreover, managing intergovernmental fiscal relations will be essential for Indonesia’s post-creation SRA, considering the country’s large and complex system of fiscal decentralization. So, ensuring a sustainable institutional trajectory for Indonesia’s post-creation SRA is a future key attention.
*Andi Mohammad Johan holds a Master in Fiscal Administrative Science from the University of Indonesia. He is a Partner at MMStax Consulting, Indonesia, and a member of the Indonesian Tax Consultants Association (ITCA).
