Ministry of Home Affairs Issues Guidelines for 2026 Regional Tax

The Ministry of Home Affairs (Kemendagri) issued guidelines for local governments on setting regional tax and levy targets in the 2026 APBD. The guidelines were released in Jakarta on 27 October 2025.

The target setting must account for regional tax potential, calculated from the last three years of tax receipts, extensification results, and the region’s macro‑economic policy as outlined in Attachment Permendagri No 14/2025. For motor vehicle tax (PKB), the target is based on vehicle registration data and the previous year’s realization; targets for name‑change fees (BBNKB) and non‑metallic mineral taxes (MBLB) rely on their prior year realizations. A regional head’s decision can be issued only after Kemendagri evaluates tax potential and the Ministry of Finance reviews the macro‑economic policy.

These targets, formalized by the regional head’s decree, serve as the basis for overall budget policy, priority setting, and the interim budget ceiling (KUA‑PPAS) discussed with the local council. The requirement aligns with Article 102 of Law 1/2022, effective since 2024, which mandates that targets reflect actual potential. The new guidelines aim to ensure that regional tax targets are realistic and coordinated with the Ministry of Finance.