Understanding Regional Taxes and Levies (Part 2)

Understanding Regional Taxes and Levies (Part 2)

Debates surrounding regional taxes are far from over. This time, the spotlight is on Jakarta. The Governor of the Special Capital Region, Pramono Anung, clarified that taxes imposed on padel courts fall under the category of entertainment tax, which is a levy governed by national legislation (Tempo, 2025). He also noted that this tax applies to 21 types of sports, including land and water-based recreational activities (detik, 2025).

In the previous article, we explored provincial-level taxes. In this follow-up, we examine regional taxes administered by city and district governments.

The authority for cities and districts to collect regional taxes is based on Law of the Republic of Indonesia Number 1 of 2022 concerning Financial Relations Between the Central Government and Regional Governments and Government Regulation Number 35 of 2023 concerning General Provisions for Regional Taxes and Levies.

Under these provisions, city and district governments are authorized to levy the following nine types of taxes:

1. rural and urban land and building tax;
2. land and building acquisition duty;
3. certain goods and services tax;
4. advertising tax;
5. groundwater tax;
6. non-metallic mineral and stone extraction tax;
7. edible bird's nest tax;
8. motor vehicle tax surcharge; and
9. motor vehicle title transfer tax surcharge. 

Rural and Urban Land and Building Tax

Rural and urban land and building tax (pajak bumi dan bangunan perdesaan dan perkotaan/PBB-P2) is imposed on land or buildings owned, controlled, or used by individuals or entities, except land used for plantations, forestry, or mining.

However, specific properties are PBB-P2 exempt, including:

1. designated government and public service buildings as state property or regional property;
2. religious, social, health, educational, and cultural facilities used non-commercially;
3. burial (cemeteries) and heritage sites;
4. protected forest, nature reserve forest, amenity forest, national park, grazing land managed by villages, and undeveloped state land;
5. foreign diplomatic or consular properties based on the principle of reciprocal treatment;
6. premises used by international organizations as stipulated by ministerial regulation;
7. public transportation infrastructure such as mass rapid transit (MRT) or light rail transit (LRT) routes;
8. properties under specific thresholds as determined by the regional head, and;
9. properties already taxed under the national land and building tax.

The subjects of PBB-P2 are individuals or entities that hold land rights, derive benefits from it, or own, control, or benefit from buildings.

The tax is calculated by applying a rate (up to 0.5%) to the tax object sales (nilai jual objek pajak/NJOP). NJOP reflects the average market value based on comparable sales. If market data is unavailable, it can be determined using the cost of acquisition or estimated replacement value. 

Land and Building Acquisition Duty

Land and building acquisition duty (bea perolehan hak atas tanah dan bangunan/BPHTB) is charged on the acquisition of rights to land or buildings. The taxpayer is the person or entity receiving those rights. The rate is capped at 5%, based on the asset’s acquisition value.

Certain Goods and Services Tax

Certain goods and services tax (pajak barang dan jasa tertentu/PBJT) applies to final consumers purchasing or using designated goods or services, including:

1. food and/or beverages;
2. electricity;
3. hospitality services;
4. parking services; and
5. entertainment and recreational services.

The tax base for PBJT is the amount paid by consumers of the goods or services. The general rate is up to 10%. However, for discotheques, karaoke, nightclubs, bars, and steam baths/spas, the rate ranges between 40% (forty percent) and 75% (seventy-five percent). In comparison, electricity is taxed at 3% and 1.5%, depending on the energy source.

Advertising Tax

Advertising tax applies to the provision of advertising media such as:

1. billboard/videotron/megatron advertising;
2. fabric banners;
3. stick-on/sticker advertising;
4. flyer advertising;
5. mobile advertising, including on vehicles;
6. aerial advertising;
7. floating billboards;
8. digital billboards; and
9. display advertising.

The tax rate can reach up to 25%, based on the assessed rental value of the ad space.

Groundwater Tax

Groundwater tax (pajak air tanah/PAT) is imposed on individuals or businesses extracting or using groundwater. Under Law of the Republic of Indonesia Number 1 of 2022, exemptions apply for the following activities:

1. basic household needs;
2. local farming irrigation;
3. community fisheries;
4. smallholder livestock farming;
5. religious purposes; and
6. other activities outlined in regional regulations.
7.  

The subject of PAT is individuals or entities that take and/or utilize groundwater, with the value of groundwater extracted as the tax base. The PAT rate is capped at 20%.

Non-Metallic Mineral and Stone Extraction Tax

Non-metallic mineral and stone extraction (mineral bukan logam dan batuan/MBLB) tax covers the extraction of minerals and stones from surface or underground sources for use. The laws and regulations in the mineral and coal sector outlined MBLB materials, including:

1. asbestos;
2. slate;
3. semi-precious stones;
4. limestone;
5. pumice;
6. gemstones;
7. bentonite;
8. dolomite;
9. feldspar;
10. rock salt (halite);
11. graphite;
12. granite/andesite;
13. gypsum;
14. calcite;
15. kaolin;
16. leucite;
17. magnesite;
18. mica;
19. marble;
20. nitrate;
21. obsidian;
22. ocher;
23. sand and gravel;
24. quartz sand;
25. perlite;
26. phosphate;
27. talc;
28. fuller's earth;
29. diatomaceous earth;
30. clay;
31. alum (alum);
32. trass;
33. jarosite;
34. zeolite;
35. basalt;
36. trachyte;
37. sulphur;
38. MBLB that are extracted as part of mineral mining activities; and
39. Other types of MBLB extractions as stipulated in applicable laws and regulations.

Edible Bird's Nest Tax

Edible bird's nest tax is levied on the harvesting or farming of swiftlet nests. However, exemptions apply for the following conditions:

1. swiftlet nest harvests already subject to non-tax state revenue; and
2. other activities of harvesting and/or cultivating swiftlet nests as stipulated in regional regulations.

The tax rate is capped at 10%, based on the market value of the swiftlet nests.

Motor Vehicle Tax Surcharge

This surcharge is imposed in addition to the regular motor vehicle tax by the district/city, as regulated by national law. According to Law of the Republic of Indonesia Number 1 of 2022, it is collected simultaneously with the motor vehicle tax and is capped at 66% of the tax payable.

Motor Vehicle Title Transfer Tax Surcharge

Motor vehicle title transfer tax (bea balik nama kendaraan bermotor/BBNKB) surcharge is imposed by the district/city under the provisions of laws and regulations.

The BBNKB surcharge is capped at 66% and is collected simultaneously with the principal BBNKB payment.

Legal References

• Law of the Republic of Indonesia Number 1 of 2022 concerning Financial Relations Between the Central Government and Regional Governments.
• Government Regulation Number 35 of 2023 concerning General Provisions for Regional Taxes and Levies.

References

• detikPramono Tegaskan Pajak Padel Diatur Undang-Undang, Bukan Inisiatif Pemprov
• TempoPadel Kena Pajak, Pramono Anung: Yang Main Orang Mampu