Government and Civil Society

Type of Investment

Risk Capital

Project Stage
Test & Transition
Length of Investment



Investment Overview

A $1.75m equity investment in OnlinePajak, who provide individuals and firms in Indonesia with a free tax-filing software, allowing them to easily prepare, file, and pay their taxes. Through its user-friendly software, OnlinePajak increases tax compliance, thereby helping to generate additional state revenue, which can then be channelled into public spending.


The Development Challenge

In developing countries, government services are chronically under-funded. Broadly, governments raise additional funds either through encouraging foreign investment or by increasing domestic resources such as taxation, savings, and investments. The latter approach has several advantages, including promoting local policy ownership and improving the stability of revenues through reduced dependence on foreign firms and policies.

Indonesia is the fourth most populous country in the world, with a poverty rate of 9.5% and an economic backbone of micro-SMEs (99% of all firms, and 95% of employees). To support its public services, the Indonesian government collects 86.2% of its resources from tax. However, the absolute amount of tax the government collects has tremendous room for growth, as collection rates remain stubbornly low. The reasons for low tax revenues are numerous, but one part of this problem is the often complex and manual collection process.


The Innovation

OnlinePajak offers Indonesian individuals and enterprises free tax-filing software that allows them to prepare, pay and file their taxes. Having worked closely with the Indonesian Tax Office for several years, OnlinePajak is an official application service provider under ministerial decree. To sustain this free service, OnlinePajak generates revenue from selling four value-added services to its user base: tax payment processing, company invoice processing, payroll software, and short-term financing to clients for invoice factoring and tax payments.

OnlinePajak estimates that in the 2017 tax year $3.3bn of revenue was collected by the government through its platform (3% of the state budget). This makes OnlinePajak one of the leading providers of e-taxation services in Indonesia.


Our Investment

Tax reform and firm productivity are major policy agendas in Indonesia. OnlinePajak can help to support the government of Indonesia’s efforts to mobilise greater domestic resources, reform tax administration, and reduce tax compliance costs for firms.

In particular, if OnlinePajak were to expand the tax base by reducing evasion and informality even by a tiny amount, then it could produce substantial benefits for Indonesia. With an improvement in the tax base of one-tenth of one percent by 2028, that would generate $144m annually in additional tax revenue. Adjusting for risk, this yields an expected $35m annually in additional tax revenue for the government of Indonesia in 2028. This is in addition to other significant benefits of OnlinePajak for the government (reducing tax administration costs and the use of data for improved tax policymaking), as well as for firms (reduced tax compliance costs) and for society.


Investment Objective

To increase tax compliance for businesses, particularly SMEs, in Indonesia and thus increase tax revenues for the government of Indonesia, and to provide additional value-added services to SME/business customers.


Why we invested

The innovation is targeted at a significant development priority – domestic resource mobilisation.

OnlinePajak has mpressive market traction, with substantial potential for further growth (over 50 million companies in Indonesia).

There is close integration with existing government tax initiatives.

There are credible co-investors with an opportunity to create additional value for the company.


OnlinePajak in numbers

$1.75 million

GIF Investment

$13.9 billion

In tax declarations processed up to 2020