BPK Finds Potentially Uncollectable Local Tax Receivables

JAKARTA, DDTCNews - The Audit Board of the Republic of Indonesia (Badan Pemeriksa Keuangan/BPK in Indnesian) has identified local tax receivables and revolving fund receivables at 22 local governments totalling IDR6.07 billion that are at risk of being uncollectable.

BPK explained that this situation implies that local governments may not recover funds that should have been deposited into the local treasury, or that such funds can no longer be put to use.

"Receivables or revolving funds that are potentially uncollectable amount to 23 issues across 22 local governments, totalling IDR6.07 billion, resulting in receivables that cannot be collected or utilised," BPK wrote in IHPS I/2026, as cited on Friday (23/10/2026).

BPK noted that issues with receivables and revolving funds that are potentially uncollectable occurred at, among others, 2 local governments.

First, the Salatiga Municipal Government, Central Java, has issues with land and building tax - urban and rural (L&B Tax-P2) receivables, user charges receivables and other lawful local own-source revenue receivables in the form of revolving fund receivables totalling IDR2.72 billion.

Second, the Blitar Municipal Government, East Java, has potentially uncollectable receivables amounting to IDR2.45 billion. These receivables arise from, among other sources, user charges from general patients at the regional public hospital, rental and facilities user charges for low-cost flats, terminal kiosk user charges, stadium shop rental user charges, building approval (persetujuan bangunan atau gedung/PBG in Indonesian) user charges and other lawful local own-source revenue receivables.

Combined, the value of potentially uncollectable receivables from these 2 local governments reaches IDR5.17 billion.

To address these issues, BPK has recommended that the relevant regional heads resolve L&B Tax-P2 receivables, user charges receivables and revolving fund receivables that are potentially uncollectable.

In addition, BPK has also requested that regional heads establish technical provisions or procedures for implementing inventory, validation, collection and the write-off of receivables relating to other lawful local own-source revenue receivables. Such provisions are required as a reference for the relevant local government work units (satuan kerja perangkat daerah/SKPD in Indonesian).

For information, local receivables are amounts of money owed to local governments and/or rights of local governments that can be valued in monetary terms as a result of agreements or other consequences pursuant to applicable statutory laws and regulations or other lawful causes.

Items categorised as local receivables include, among others, local tax receivables, user charges receivables and other local own-source revenue (pendapatan asli daerah/PAD in Indonesian) receivables.

Meanwhile, revolving funds are funds allocated by state ministries/agencies/work units of public service agencies to support business capital strengthening activities for cooperatives, micro, small, medium enterprises and other businesses under the guidance of the relevant state ministries/agencies. (dik)