The government has scrapped more than 2,000 bylaws with the potential to disrupt investment and burden business, the Home Affairs Ministry said on Monday, and thousands more could go.
“Up to now, the ministry has revoked 2,285 regulations,” said Raydonnyzar Moenek, a ministry spokesman. “There are 2,678 more bylaws in the process of being canceled and 175 that are being clarified and could be dropped.
“Basically, those regional bylaws have been revoked because they go against the 2006 presidential decree on improving the investment climate.”
The ministry is reviewing 9,408 bylaws, with the Finance Ministry advising that 4,885 of those could be scrapped.
Raydonnyzar said the bylaws being reviewed were issued between 2002 and 2011, before the 2009 Regional Tax and Revenue Law was implemented.
The national law on taxes and the regional bylaws often contradict, creating an environment where businesses are unsure of their tax obligations.
Home Affairs Minister Gamawan Fauzi said his office had reviewed more than 50 percent of existing bylaws that could hamper investment with levies and other taxes.
But there is concern that if the bylaws were all scrapped at once, it would leave many taxpayers out in the cold who had paid their taxes based on the regional legislation.
Gamawan said the government would discuss tax refunds for businesses that paid higher rates under the regional bylaws.
“ We are going to study what kind of refund mechanism is needed because the taxes have been paid for more than five years,” he said. “We might need to consider sourcing funding.”
Since regional autonomy was introduced in the wake of President Suharto’s resignation in 1998, districts and provinces have issued bylaws taxing nearly all businesses and government services. Those bylaws often overlap with laws issued by the central government or conflict with ones issued by other districts and provinces.
The central government has identified many bylaws to be repealed. These included taxes on the traffic of livestock, entertainment businesses, public transportation and the mining industry.
Overlapping taxes between the regional and central governments have been blamed for increasing the cost of living in Indonesia and creating more bureaucratic red tape.