Title: Service innovation in the complex environment of tax administration: the Indonesian public sector perspective

Authors: Agung Darono; Dessy Irawati

Addresses: Finance Education and Training Unit of Malang, Ministry of Finance, Ahmad Yani Utara No. 200, Malang, East Java 65125, Indonesia ' Bank Negara Indonesia (BNI), Netherlands, Stationsstraat 24-15, Tilburg 5038 ED, The Netherlands

Abstract: Providing straightforward and inexpensive public services is a necessity in public administration including in the field of tax administration. To simplify the tax administration process, the Indonesian Directorate General of Taxes (DGT) has initiated an electronic tax service project, e-tax service. This e-tax service consists of e-registration, e-payment and e-filing. Using institutional theory, this paper aims to study the process and the challenges in implementing the e-tax service in Indonesia. The findings show that institutional power and pressures, institutional settings, and institutional politics have affected the Indonesian tax authority's ability to deploy the e-tax system. Consequently, the e-tax initiative could not be fully implemented because of institutional setting and institutional politics.

Keywords: electronic services; e-services; service innovation; institutional pressures; simplification; tax administration; Indonesia; public sector; public services; electronic tax services; e-tax services; e-registration; e-payment; e-filing; institutional theory; institutional power; institutional settings; institutional politics; taxation; taxes.

DOI: 10.1504/IJIRD.2015.067650

International Journal of Innovation and Regional Development, 2015 Vol.6 No.1, pp.102 - 123

Received: 18 Mar 2014
Accepted: 17 Nov 2014
Published online: 18 Mar 2015 *

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