The Government Cancels Local Tax Intervention Through The Job Creation Act

Illustration. (Irfan Meidianto / VOI)

JAKARTA - The government and the House of Representatives (DPR) removed the substance of articles related to regional tax and regional retribution (PDRD) intervention in the Omnibus Law on Cipta Kerja, which was passed some time ago. However, until now there has been no official explanation from the government regarding the abolition.

Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance (Kemenkeu) Febrio Kacaribu spoke about this. He explained that currently the central government and local governments are still studying the impact of the implementation of the national PDRD tariff and regional fiscal incentives.

"I can't be sure. This must be put in the context of the relationship between the central government and the regions, this should be considered slowly. Maybe later it can be regulated in another law," he said in a video conference , Monday, October 12.

Currently, said Febrio, the government already has a fiscal decentralization instrument through transfers to regions and village funds (TKDD), which form a very large part of the national income and expenditure budget (APBN).

"We still need to see the synchronization of economic growth and each region that can be used by preparing TKDD as an instrument. This is the big goal," he said.

In Chapter VIA on National Fiscal Policies Relating to Taxes and Charges, the policy aims to support the policy of ease of investment and to encourage the growth of highly competitive business world. Apart from that, this provision provides protection and fair regulation to entrepreneurs.

Article 156A paragraph 1 Chapter VIA concerning National Fiscal Policy Relating to Taxes and Levies on the Work Creation Omnibus Law Bill, reads:

"The government according to the national priority program can intervene in the tax and retribution policies set by the regional government ,".

The central government intervention related to PDRD includes two things. First, it can change the tax rates and levy rates by determining the tax rates and levy rates that apply nationally.

Second, monitoring and evaluation of local governments regarding taxes and fees that hinder the investment ecosystem and ease of doing business.

In the Ciptaker Law, when conducting supervision, the finance minister has the power to evaluate both draft regional regulations (raperda) and existing perda.

The results of the evaluation conducted by the Minister of Finance can be in the form of approval or rejection of the draft local regulation. This means that if the policy is approved by the Minister of Finance, the regional government can immediately stipulate the policy as a regional regulation.