DKI Gives Tax Discounts, Is It Effective For All Regions?

Tax (Photo: dock. Unsplash)

Tax Observer from the Center for Indonesia Taxation Analysis (CITA) Fajry Akbar assesses that the policy of providing a certain Goods and Services Tax discount (PBJT) currently implemented by local governments is in line with the counter-cyclical fiscal policy paradigm, namely when the economy weakens, the government actually needs to provide stimulus to encourage economic activity.

He added that the stimulus can be done through increasing government spending and providing tax incentives.

He emphasized that the implementation of this counter-cycle fiscal policy must still take into account the financial condition of the Regional Revenue and Expenditure Budget (APBD).

"As long as the tax incentives used are still in the corridor of the APBD which are healthy and appropriate, this can be justified, and a proper policy," he told VOI, Wednesday, August 27.

Fajry stated that the main key to the success of fiscal incentives lies in the right policy design.

He added that in the context of DKI Jakarta, regional revenues are supported by many Rural and Urban Land and Building Taxes (PBB-P2), while incentives are given to other types of taxes.

Thus, he continued, regional income is maintained while still providing space for the business world to grow through incentives.

He suggested that local governments use three main criteria in evaluating the effectiveness of tax incentives, namely first, to what extent these incentives produce a multiplier effect on the economy.

Next second, the impact on income distribution, whether it is more profitable for the lower or upper middle class.

He added that the third was the time for providing incentives, whether it was done at a time when it was needed.

Fajry emphasized that not all regions can implement similar policies. Tax incentives must consider the capacity and fiscal independence of each region.

"We know that the DKJ Jakarta Provincial Government has more fiscal capacity and independence than other regions," he said.

For information, the Provincial Government (Pemprov) of DKI Jakarta officially provides tax relief incentives through three schemes, namely first, a 50 percent discount for certain goods and services taxes on hotel services that are valid from August 25 to September 2025; Second, a 20 percent discount for certain goods and services taxes on hotel services valid from October to December 2025; Third, a 20 percent discount for food and beverage taxes that is valid from August to December 2025.