Page 5 - Newsletter (VAT Borne by the Government Incentive for Mass Media and the National Implementation of E-Faktur 3.0)

DDTC Newsletter Vol.04 | No.05 I September 2020 Page 5 of 6

VAT Borne by the Government Incentive for Mass Media and
the National Implementation of E-Faktur 3.0

take into account the period from 14 to 20 September Second, calculating the provincial/regency/city KFD
2020 (7 days) either in the calculation of the period index. The KFD index is calculated by dividing the
regulated under the provisions of Article 81 and value of the fiscal capacity of a region with the average
Article 82 of Law No. 14 of 2002 concerning the Tax KFD of all regions.
Court.
Based on the KFD index, provinces/regencies/cities
In the event that further provisions concerning the are grouped into five categories of fiscal capacity
implementation of the circular are required, the ranging from very low, low, medium, high, to very
Chairperson of the Tax Court will stipulate such high. The KFD index serves as the basis for classifying
provisions separately. Stipulated on 14 September regional financial capacity to compile KFD maps.
2020, this regulation has taken effect thereafter.
Based on the KFD maps listed under MoF Reg.
120/2020 appendix, nine provinces out of 34
provinces in Indonesia are categorized in the very low
2020 Regional Fiscal Capacity Maps KFD, among others, West Sulawesi, West Papua, and
Gorontalo. Next, eight provinces are grouped in the
The majority of local governments, both provincial low KFD category, such as Jambi, West Nusa Tenggara,
and regency/municipal governments, have a low level and Southeast Sulawesi.
of regional fiscal capacity (Kapasitas Fiskal Daerah/
KFD). The KFD level is outlined in the Minister of Subsequently, eight provinces are included in the
Finance Regulation No. 120/PMK.07/2020 concerning medium KFD category, such as West Sumatra, Lampung,
KFD Maps (MoF Reg. 120/2020). Promulgated on 1 and Central Kalimantan. Moreover, five provinces are
September 2020, this regulation lists KFD maps of all categorized as having high fiscal capacity, including
regions, provinces, and regencies/cities in Indonesia. South Sulawesi and East Kalimantan. Finally, four
provinces are in the very high KFD category, including
KFD refers to the financial capacity of each region
DKI Jakarta, West Java, Central Java, and East Java.
which is reflected in the regional revenues less the
revenues whose use has been determined and certain In terms of regency/city KFD maps, however, 126 out
expenditures. A KFD map, on the other hand, refers to of 508 regencies/cities are classified in the very low
a description of regional financial capacity grouped by KFD category, including Sabang City and Pasuruan
the KFD index. City. Next, 128 regencies/cities fall into the low KFD
category, such as Bukittinggi City, North Lombok
Provincial/regency/city KFD maps are prepared in Regency, and Batu City.
two stages. First, calculating the KFD of a province/
regency/city. KFD is calculated by subtracting regional On another note, 126 regencies/cities are included
revenues by revenues whose use has been determined in the medium KFD category, such as Raja Ampat
and expenditures. Regency, Kendari City, and Palangka Raya City. Next,
91 regencies/cities fall into the high KFD category,
Said regional revenues include local own-source including Cirebon Regency, Malang Regency, and
revenues, balance funds, and other legal revenues. Manado City. Finally, 37 regencies/cities are in the very
Conversely, revenues whose use has been determined high KFD category, such as Balikpapan City, Tangerang
include, among others, tobacco excise revenue sharing
Regency, and Surabaya City. Details of the KFD maps
funds, physical special allocation funds, non-physical
are listed in the appendix of MoF Reg. 120/2020.
special allocation funds, special autonomy funds,
KFD maps may be utilized for three things. First,
and profit-sharing funds of mineral and gas natural
resources in the framework of special autonomy. as considerations in determining grant-receiving
regions. Second, the regional government determines
Further, certain expenditures include personnel the amount of co-funding –if so required –. Third, other
spending, interest spending, grant spending for new
uses as per statutory regulations.
autonomous regions, production sharing expenditures,
and village fund allocations (for regencies/cities).