Automating Withholding Tax Reconciliation as Part of Digital Transformation: A Case Study of the Largest Copper Company in Indonesia
DOI:
https://doi.org/10.46799/adv.v4i10.709Keywords:
Withholding Tax Reconciliation, Business Process Re-engineering, Digital Transformation, Core Tax System, Audit Readiness, Tax Compliance AutomationAbstract
PER-8/PJ/2025, concerning the Core Tax Administration System, and PMK 15/2025, which establishes strict, nonextendable tax audit deadlines, introduced significant compliance challenges for Indonesia's largest copper mining company (hereinafter referred to as "the Company"). The Company's six-month manual withholding tax (WHT) reconciliation process, covering Income Tax Articles 23, 26, 4(2), and 15, was incompatible with the operational requirements of these regulatory frameworks. Employing Business Process Reengineering (BPR) and an exploratory sequential mixed-methods design, this study mapped the existing (as-is) process, identified operational gaps, and developed a proposed automated reconciliation solution. Interviews with internal stakeholders and four external tax consultants identified three critical dimensions: a velocity gap, characterized by a six-month reconciliation cycle compared with the near-real-time processing requirements of the Core Tax Administration System; an accuracy gap, resulting from inconsistent tax classifications dependent on individual staff members; and an audit readiness gap, arising from the absence of readily accessible, traceable reconciliation records and the potential escalation of unresolved compliance issues into tax investigations. The proposed rule-based automated reconciliation pipeline was projected to reduce annual labor hours by 90%, improve alignment with PMK 15/2025 requirements, and generate substantial financial benefits. The study concluded that automating the Company's WHT reconciliation process represented a strategic compliance transformation, shifting from reactive manual reconciliation toward a continuously updated, traceable, and audit-ready system.
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