THE IMPLEMENTATION OF THE CORETAX SYSTEM ON TAX COMPLIANCE ANDTHE QUALITY OF CORPORATE TAX REPORTING IN INDONESIA

Abstract

This study investigates the impact of the Core Tax Administration System (Coretax) implementation on corporate tax compliance and tax reporting quality among publicly listed firms in Indonesia, as well as the moderating role of audit quality. Using a quantitative approach and a Difference-in-Differences (DiD) design, the research analyzes panel data for manufacturing and financial sector firms listed on the Indonesia Stock Exchange over the 2022–2025 period. Tax compliance is proxied by the Effective Tax Rate (ETR), tax reporting quality by the Book-Tax Difference (BTD), Coretax implementation by a pre–post dummy for 1 January 2025, and audit quality by a Big Four dummy, with SIZE, LEV, and ROA included as control variables. The models are estimated using panel regression (REM and CEM) with clustered robust standard errors, complemented by robustness checks employing alternative ETR measures. The empirical results show that Coretax does not have a statistically significant short-term effect on tax compliance, but it positively and significantly enhances tax reporting quality through improvements in BTD characteristics. Furthermore, Big Four audit quality does not significantly moderate the relationship between Coretax and tax compliance, and this finding remains stable across robustness tests. These results suggest that Coretax is initially more effective in strengthening the integrity of tax reporting than in increasing effective tax rates, and that differentiation in auditor quality has yet to play a substantial role in the early phase of the reform.