Beyond Voluntary And Enforced Compliance: Digital Transformation As A Path To Sustainable Tax Harmony

Abstract

Introduction: In the context of modern tax reform, understanding how psychological factors such as mental accounting interact with digital tax transformation is becoming increasingly important. This is particularly relevant for developing countries such as Indonesia, where the digitisation of the tax system is still in the consolidation stage and efforts to improve taxpayer compliance are a top priority.
Objective: This study aims to analyse the relationship between mental accounting—that is, the cognitive grouping of tax obligations—and tax compliance behaviour, emphasising the mediating role of digital tax transformation. This study also develops the Concept of Sustainable Tax Balance, which views compliance as the result of a sustainable partnership between taxpayers and tax authorities, rather than simply a choice between voluntary compliance or enforced compliance.
Method: A quantitative approach was used with cross-sectional survey data from 1,075 individual taxpayers in Indonesia. Analysis was performed using Structural Equation Modelling (SEM) to test the direct and mediating relationships between the main variables, thereby ensuring the empirical validity of the proposed conceptual framework.
Results: The results show that mental accounting has a significant effect on digital tax transformation, which in turn mediates the relationship with three dimensions of tax compliance: voluntary compliance, enforced compliance, and sustainability of tax harmony. Digital transformation was found to increase voluntary compliance by strengthening taxpayer trust and comfort, while reducing reliance on enforcement mechanisms such as audits, fines, and administrative sanctions.
Conclusion: Theoretically, this study expands the tax compliance literature by introducing the perspective of Sustainable Tax Balance, which emphasises the synergy between psychological factors and fiscal digitalisation. Practically, tax authorities are advised to prioritise digital facilitation and technology-based service innovation over coercive strategies to build a participatory, sustainable, and non-confrontational tax ecosystem.