Digital Financial Technology and Inclusion in Improving Local Tax Compliance: Evidence from West Sumatra

¹ Government Information Technology, Institute Pemerintahan Dalam Negeri, Jatinangor, Indonesia
² Public Finance, Institute Pemerintahan Dalam Negeri, Jatinangor, Indonesia
³ School of Business, Universiti Kuala Lumpur, Kuala Lumpur, Malaysia
⁴ Public Policy and Leadership, Economic Development Yeungnam University, South Korea
⁵ Institute of Social Science, Bursa Uludag University, Turkiye

^* Corresponding author: ardieansyah@ipdn.ac.id

Abstract

We examine the effects of digital financial technologies (FinTech) in local tax compliance in West Sumatra, Indonesia. A combination between a survey questionnaire and in-depth interviews was used to explore local taxpayers, government officials, and FinTech providers. The outcome suggests that digital tools enhance tax compliance by increasing access, transparency and efficiency. However, barriers such as weak digital literacy and gaps in infrastructure remain. The study emphasizes the significance of applying digital technology within tax administration to perform governance effectively. Encouragingly, the use of FinTech activities requires a targeted goal focusing on digital literacy and digital trust. This paper offers significant findings in regard to the impact of FinTech on the improvement of tax compliance in developing countries.