Local Gov’t Can Tax Unlicensed Businesses, Including Mining

The Ministry of Home Affairs issued Permendagri No.14/2025 on 27 October 2025, authorizing local governments to levy regional tax on business activities that lack a license, including illegal non‑metal mineral (MBLB) mining. The tax applies even when the operator has not obtained formal permission.

The regulation states that any individual or entity whose activity meets the tax‑object criteria is a taxpayer regardless of licensing, so tax payments are not classified as illegal levies. For illegal MBLB mining, tax can be collected if the operation occurs within an area designated as an exploration zone through spatial planning regulations. When mining takes place outside such zones, local authorities together with the regional leadership forum must halt extraction and close the site to protect the environment.

This measure provides regional authorities with a tool to boost tax revenue while encouraging the regularization of unlicensed enterprises, particularly in the illegal mining sector, which is expected to improve natural resource management and curb environmentally harmful activities.