New Gov. Reg. Issued! Government Sets PBJT Regulation for Electricity

JAKARTA, DDTCNews - The government has officially released Government Regulation (Gov. Reg.) Number 4/2023 which stipulates street lighting tax (Pajak Penerangan Jalan, hereinafter referred to as PPJ) or now referred to as taxes on certain goods and services on electricity (Pajak Barang dan Jasa Tertentu atas Tenaga Listrik, hereinafter referred to as PBJT-TL).

In the consideration section, Gov. Reg. 4/2023 needs to be enacted to follow up on the Constitutional Court (Mahkamah Konstitusi, hereinafter referred to as MK) Decision Number 80/PUU-XV/2017 and carry out the mandate of 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).

“To provide legal certainty for the collection of taxes on electricity consumption, it is necessary to stipulate this Gov. Reg. as an implementing regulation of the Financial Relations between the Central Government and Local Governments Law,” the government writes in the elucidation of Gov. Reg. 4/2023, quoted on Tuesday (31/1/2023).

The Constitutional Court Decision Number 80/PUU-XV/2017 also states that PPJ pursuant to Law 28/2009 concerning Local Taxes and Local Charges (Pajak Daerah dan Retribusi Daerah, hereinafter referred to as PDRD) may only be collected until 12 December 2021. This implies that the provisions on taxes on electricity consumption must be updated.

Gov. Reg. 4/2023 also stipulates that PBJT-TL is imposed on electricity consumption, namely the use of electricity by end users. PBJT-TL is not imposed on electricity consumption by government agencies, embassies, consulates, foreign representatives, houses of worship, nursing homes, orphanages and social institutions.

Consumption of self-produced electricity as long as it has a certain capacity that does not require permission from the relevant technical agency. 

The consumption of self-generated electricity is not subject to PBJT-TL either insofar as it has a certain capacity that does not require a permit from the relevant technical agency. Other electricity consumption may also be excluded from PBJT-TL insofar as it is regulated under regional regulations.

The tax base of PBJT-TL is the amount paid by consumers for the selling value of electricity. The PBJT-TL rate is set at a maximum of 10%.

Specifically for the consumption of electricity from other sources by industries, oil and natural gas mining, the PBJT-TL rate is set at a maximum of 3%. The PBJT-TL rate for the consumption of self-generated electricity is set at a maximum of 1.5%.

The local governments that collect PBJT-TL must allocate a minimum of 10% of the tax revenues to provide public street lighting. Otherwise, the local governments will be subject to penalties pursuant to statutory provisions.

“To harmonise fiscal policies and monitor the fulfilment of the allocation … , the Government prepares a standard chart of accounts and/or performs tagging of expenditures funded from PBJT-TL revenues,” reads Article 12 of Gov. Reg. 4/2023.

With the promulgation of Gov. Reg. 4/2023, local governments are mandated to adjust regional regulations concerning PPJ in their respective regions through the preparation of regional regulations concerning local taxes and local charges. Adjustments are to be performed no later than 5 January 2024.

Promulgated by the government on 20 January 2023, Gov. Reg. 4/2023 takes effect on the date of promulgation. (rig)