DGFB Prepares Local Tax Potential Modules for Local Governments

JAKARTA, DDTCNews - The Directorate General of Fiscal Balance (DGFB) held a webinar on local taxes and user charges entitled Data-Based Local Tax Targets: Strategies for Progressive and Measurable Local Tax Planning today, Wednesday (15/7/2026).

Director General of Fiscal Balance Acting Official at the Ministry of Finance (MoF), Nufransa Wira Sakti, said that one of the challenges faced by local governments in managing local own-source revenue (LOSR) is the identification of local tax and user charges potential.

"In many regions, the challenge does not lie in the absence of local revenue potential. The more fundamental challenge is how the potential gap can be identified, measured and transformed into sustainable local revenue," he said.

Nufransa explained the importance of local governments identifying local tax and user charges potential. Moreover, Article 102 of the Law concerning Financial Relations between the Central and Local Governance (HKPD Law) requires local governments to set local tax and user charges targets by considering at least 2 aspects, namely local macroeconomic policies as well as local tax and user charges potentials.

Unfortunately, currently, most local governments still set local tax and user charges targets based solely on realisation trend data, rather than on macroeconomic policies and potentials, as mandated by the HKPD Law.

"The inadequate exploration of local tax potential can be seen in the rising realisation of local tax revenue that has yet to align with economic growth in each respective region," said Nufransa.

Reflecting on this situation, Nufransa continued, the DGFB will launch potential exploration modules based on the type of local tax. At present, the DGFB has launched only the motor vehicle tax (MVT) potential exploration module.

"We hope that our commitment to supporting local governments will be welcomed through follow-up action in the form of MVT potential analysis in each respective region, to be subsequently used in MVT planning, taking into account the specific compliance conditions in each region," he claimed. (rig)