Indonesia's Tax Authority Responds to MUI Fatwa on Property Taxation

Centralized Discussion on Unfit Property Tax

Indonesia's Director General of Taxes, Bimo Wijayanto, has addressed the recent fatwa issued by the Indonesian Ulema Council (MUI) concerning the taxation of unfit residential properties. The tax authority has clarified that the Property Tax (PBB) has been decentralized to regional governments, granting them full authority over tax-related matters including tariffs, rate increases, and imposition.

Decentralization of Property Tax

Bimo Wijayanto emphasized that the central tax authority's role is limited since the PBB legislation has been devolved to regional authorities. This decentralization means that local governments now have control over various aspects of property taxation. The Director General noted that the central government's jurisdiction is restricted to specific sectors such as marine, fisheries, mining, and forestry.

Ongoing Dialogue with MUI

Despite the decentralization, Bimo highlighted that the central tax authority will continue discussions with MUI to understand the implications of their fatwa. The dialogue aims to clarify the fatwa's context, particularly its relevance to PBB-P2 (Rural and Urban Property Tax). This ongoing discussion indicates the government's willingness to engage with religious authorities on matters of taxation and social welfare.

Implications for Property Taxation

The fatwa's impact on property taxation in Indonesia remains to be seen. While the central tax authority has limited direct control over PBB-P2, the discussion with MUI suggests a broader examination of property tax policies. This development could potentially influence how property taxes are perceived and implemented across different regions in Indonesia.