Governments should adopt risk-based taxation backed by strong enforcement to improve compliance without distorting markets, global tax expert Ashok Kaul said.

Speaking at the Innovation Summit Southeast Asia in Jakarta, Kaul, a senior adviser at global consulting firm Roland Berger, said tax systems are most effective when they are evidence-based, supported by clear regulations, and aligned with defined policy objectives.

Rather than simply increasing tax rates, policymakers should design tax structures that reflect the specific risk profile and characteristics of products, he said.

Kaul argued that taxation should be applied consistently according to the level of risk posed by products instead of treating fundamentally different products the same.

He added that effective public policy requires taxation to be paired with sound regulation and strong enforcement.

As an example, Kaul cited Indonesia's electric vehicle policies, saying coordinated regulations and tax incentives have helped encourage EV adoption while supporting domestic manufacturing.

He also cautioned against government interventions that become overly punitive or remain in place beyond their intended purpose, stressing that tax and regulatory policies should be reviewed regularly to ensure they continue achieving their objectives without undermining economic competitiveness.

Kaul also highlighted the growing role of data-driven regulation, pointing to Roland Berger's study on modern supervisory authorities, which recommends using data analytics and risk-based oversight to strengthen compliance, improve enforcement, and reduce unnecessary burdens on compliant businesses.

Kaul was among the featured speakers at the Asia Pacific Tax Forum 2026 in Kuala Lumpur on 28 and 28 July.