OnlinePajak secures $25m funding to improve Indonesia’s tax landscape

Photo credit: Farhan Perdana

Tax is the primary source of revenue for most countries, allowing governments to fund social security, healthcare, and infrastructure for their citizens. Unfortunately, the countries that need these the most are also often the ones where the gulf between the taxes levied and the actual amount of money collected from taxpayers is the widest.

Indonesia is a poor performer when it comes to tax collection, losing as much as US$7.48 billion – or 0.85 percent of its GDP – in unpaid taxes in 2013, according to a United Nations study.

While the situation is improving, Indonesia’s tax-to-GDP ratio remains far below the 15 percent that the International Monetary Fund suggests is needed to stimulate growth in middle-income economies.

There’s still plenty that can be done to improve tax collection across the island country, and Jakarta-based OnlinePajak is leading the charge. It has just raised US$25 million in a series B round led by Warburg Pincus.

Endeavour Catalyst and the Global Innovation Fund also joined the round, along with existing investors Alpha JWC Ventures, Sequoia Capital, and Primedge.

OnlinePajak is a web app that helps individual and business taxpayers to calculate and pay their taxes. Operating on a freemium model, the service allows users to manage their tax payments for free. It charges for additional premium features such as invoicing and employee payroll management.

Co-founder and CEO Charles Guinot said the startup will use the fresh funding to “realize a revolution in tax compliance through technologies like artificial intelligence and blockchain.”

OnlinePajak previously raised between US$3 million and US$5 million in its series A round, which closed in November last year.