In Formulation, Draft Gov. Reg. Aligns Local Taxes with the GPTP Law

JAKARTA, DDTCNews - The Directorate General of Fiscal Balance (DJPK) is formulating a Draft Government Regulation (Draft Gov. Reg.) concerning General Provisions on Local Taxes and Local Charges (Ketentuan Umum Pajak Daerah dan Retribusi Daerah, hereinafter referred to as KUPDRD).

Through the Draft Gov. Reg., local tax provisions will be aligned with tax provisions in the central government as stipulated in the General Provisions and Tax Procedures Law.

“[There are also] arrangements of the cooperation in optimising tax collection between local governments and the government, other local governments and third parties,” the Directorate General of Fiscal Balance wrote in its official statement, quoted on Friday (16/9/2022).

The objectives of the strengthening of local taxing power formulated under Law 1/2022 concerning Financial Relations between the Central Government and Local Governments (Hubungan Keuangan antara Pemerintah Pusat dan Pemerintahan Daerah, hereinafter referred to as HKPD) will be continued and strengthened in the Draft Gov. Reg. concerning KUPDRD.

Increased local taxing power may only be achieved through the support of good data management and utilisation, the synergy between local governments and the synergy between local governments and governments and third parties.

On a side note, promulgated and effective as of 5 January 2022, the HKPD Law also stipulates local taxes and charges. Through this law, the provincial governments are granted new authority to collect heavy equipment tax (Pajak Alat Berat, hereinafter referred to as PAB) and non-metallic mineral and rock (Mineral Bukan Logam dan Batuan, hereinafter referred to as MBLB) surcharge.

The regency/municipal governments are authorised to collect motor vehicle tax (Pajak Kendaraan Bermotor, hereinafter referred to as PKB) and motor vehicle duty surcharge (Bea Balik Nama Kendaraan Bermotor, hereinafter referred to as BBNKB).

Consumption-based regency/municipality-level local taxes, namely hotel, restaurant, entertainment, street lighting and parking taxes, are also integrated into 1 new type of tax, namely taxes on certain goods and services (Pajak Barang dan Jasa Tertentu, hereinafter referred to as PBJT).

The local tax provisions in the HKPD Law officially take effect and must be adopted by all local governments no later than 5 January 2024. Specifically, the provisions on PKB, BBNKB, MBLB tax and surcharges of the three types of taxes will not take effect until 5 January 2025. (sap)