Behavioural Intervention to Increase Responses over Letters from Tax Office and Tax Payment Compliance: A Pilot Randomised Trial in Indonesia

In response to the low payment compliance among individual taxpayers who previously reported their annual income tax returns indicating the obligation to pay monthly Article-25 income tax and the low responses when the tax office sent the reminders, we rolled out a behavioural nudge to increase responses and payment compliance. The nudge took the form of simplifying the notification letters presented by eliminating complicated languages and providing readily used biller codes was launched in expectation to change the payment and response rates. A pilot randomised controlled trial method was used to examine the effect of the intervention. The intervention was designed based on the status-quo letter modified, with the argumentation that the current reminder letter's design is tedious and potentially creates a psychological barrier on taxpayers' side to respond as expected by the tax office. We recruited 190 individual taxpayers registered at a tax office in Jakarta, Indonesia as the sample. The sample were randomised using simple randomisation technique. We expect the results of this pilot trial could be used to design larger experiment in the future as simplifying the existing written communication to the taxpayers is justifiably applied widely as one of the strategies to increase Indonesian taxpayers' compliance.