From Confrontation to Collaboration: Cooperative Compliance Tax

At the end of the mid‑20th century, tax authorities in many countries relied on a confrontational approach, treating taxpayers as potential cheaters through aggressive audits. This article, published on 14 October 2025, reviews the shift toward a cooperative compliance model that emphasizes collaboration. The new approach seeks to replace confrontational inspections with a relationship based on trust.

The OECD recommends that tax administrations tailor treatment according to taxpayers’ compliance behavior, which it classifies into four groups. To identify these groups, several jurisdictions have adopted a tax control framework (TCF), an internal control system that ensures accurate tax liabilities, proper disclosure, and board‑level oversight. Cooperative compliance, defined as a collaborative relationship built on transparency and certainty, is already used for large taxpayers in Malaysia, Singapore, Australia, the Netherlands and the United States.

Adopting cooperative compliance and TCF in Indonesia could grant compliant taxpayers special treatment such as priority services or penalty waivers. This is expected to boost overall compliance, lower disputes, and create a fairer tax system. Successful implementation will require coordinated effort among the tax authority, taxpayers and tax consultants.