All Provinces Below Local Tax Ratio Target; Bali Highest

JAKARTA, DDTCNews - All provinces in Indonesia still recorded a local tax ratio (LTR) below the 2029 target.

Nevertheless, LTR achievements across regions show a wide gap, with Bali occupying the highest position and West Papua the lowest in 2025. These findings are set out in the study Analysis of Regional Local Tax Ratio Indicator Achievement, prepared by the Ministry of National Development Planning/Bappenas together with SKALA.

"In 2025, all provinces are essentially still below the 2029 target," reads the report Analysis of Regional Local Tax Ratio Indicator Achievement, cited on Monday (26/10/2026).

The LTR is the ratio of local tax revenues to the gross regional domestic product (GRDP). This indicator is used to assess a region's ability to convert economic activity into local tax revenue.

According to the study, Bali recorded the highest LTR in 2025 at 4.60%. However, this achievement remains below Bali's 2029 LTR target of 7.22%, leaving a gap of 2.61 percentage points from the target.

Conversely, West Papua recorded the lowest LTR in 2025 at 0.38%. Despite being at the bottom based on actual performance, West Papua is among the provinces projected to reach or approach the LTR target by 2029, based on historical trends.

Apart from Bali, the largest gaps between the 2025 actuals and the 2029 targets were also recorded in East Nusa Tenggara at 1.17 percentage points, the Special Region of Yogyakarta at 0.97 percentage points, Papua at 0.78 percentage points and Banten at 0.71 percentage points.

The study notes that a large gap does not necessarily indicate poor local tax performance. The gap is also influenced by targets that are relatively optimistic compared with the starting position of each province.

Nationally, the LTR fell from 1.22% in 2024 to 1.12% in 2025. Over the longer term, LTR developments during the 2014–2025 period also show a tendency towards stagnation, or even decline, in a number of provinces.

Nevertheless, projections based on historical trends indicate that a number of provinces have the opportunity to reach or approach the target by 2029. Several regions are even projected to exceed the target, including East Kalimantan, Central Kalimantan, South West Papua and West Nusa Tenggara.

The study explains that LTR achievement is influenced by a range of factors, not only the size of the local economy. Economic structure, the composition of the tax base, tax administration capacity, taxpayer compliance and the effectiveness of local tax policy implementation all contribute to the outcome.

Accordingly, strengthening local taxing power needs to be tailored to the characteristics of each region. This can be achieved through tax intensification and extensification as well as improvements in tax governance to enable the economic potential of regions to be converted into tax revenues more optimally. (dik)