The Challenge of Local Revenue Enhancement through Boarding House Taxation Policy in Yogyakarta City

Abstract

Introduction to The Problem: In early 2019, the total data on Building Permits for Boarding Houses in Yogyakarta City reached more than 700 houses, and the local tax revenue for the category Boarding House did not reach 40 homes yearly. The urgency of enforcement of the boarding house tax regulation is relevant to increasing tax compliance rates and local revenue from boarding houses.Objective Study: This study examines the enforcement of the Regional Regulation of Number 1 of 2011 on Local Tax and the obstacles to its implementation using the law system components, the law enforcement factors and the law enforcement elements.Methodology: The data used are primary data and secondary data through a regulatory approach. Data collection uses a structured interview process by interviewing five interviewees who handled the enforcement of boarding house tax rules.Findings: The service quality of tax authority factor, law enforcement officers’ factor, and tax sanctions factor have adjusted the public needs (as a legal benefit) and legal certainty while does not provide justice to the community. Implications of the study for tax policy of the Boarding House category are the imposition of criminal sanctions and administrative sanctions against non-compliance boarding house taxpayers, the coordination between tax authorities and law enforcers to enforce boarding house tax rules, and the development of boarding house tax regulations relating to the tax sanctions theory.Paper Type: Research Article

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The Challenge of Local Revenue Enhancement through
Boarding House Taxation Policy in Yogyakarta City
Fatimah Nuraini1, Nasrullah², Abd Hamid Bin Abd Murad³
1 Law, Faculty of Law, Universitas Muhammadiyah Yogyakarta, Indonesia
fatimah.nuraini.2016@law.umy.ac.id
2 Law, Faculty of Law, Universitas Muhammadiyah Yogyakarta, Indonesia
nasrullah@umy.ac.id
3 Fakulti Syariah dan Undang-Undang, Universiti Sains Islam Malaysia, Malaysia
hamid@usim.edu.my
Abstract
Introduction to The Problem: In early 2019, the total data on Building Permits for
Boarding Houses in Yogyakarta City reached more than 700 houses, and the local tax
revenue for the category Boarding House did not reach 40 homes yearly. The urgency
of enforcement of the boarding house tax regulation is relevant to increasing tax
compliance rates and local revenue from boarding houses.
Objective Study: This study examines the enforcement of the Regional Regulation of
Number 1 of 2011 on Local Tax and the obstacles to its implementation using the law
system components, the law enforcement factors and the law enforcement elements.
Methodology: The data used are primary data and secondary data through a
regulatory approach. Data collection uses a structured interview process by
interviewing five interviewees who handled the enforcement of boarding house tax
rules.
Findings: The service quality of tax authority factor, law enforcement officers’ factor,
and tax sanctions factor have adjusted the public needs (as a legal benefit) and legal
certainty while does not provide justice to the community. Implications of the study
for tax policy of the Boarding House category are the imposition of criminal sanctions
and administrative sanctions against non-compliance boarding house taxpayers, the
coordination between tax authorities and law enforcers to enforce boarding house tax
rules, and the development of boarding house tax regulations relating to the tax
sanctions theory.
Paper Type: Research Article
Keywords: Boarding house tax; Local tax; Tax compliance; Law enforcement
Introduction
The Revenue Statistics in Asian and Pacific Economies 2020 published by The
Organization for Economic Cooperation and Development (OECD) shows that
Indonesia had the lowest Tax-to-GDP 2018 ratio in the Asia Pacific. Indonesia got an
11.9% Tax-to-GDP 2018 ratio from the overall average of 34.3% (OECD, 2020). It is
because the Indonesian tax system does not use the broad tax ratio of the OECD to
calculate the Tax Ratio, but the 2001 Government Finance Statistics Manual (GFSM)

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standard was published by the International Monetary Fund (IMF) (Setiawan, 2015).
Indonesia's tax ratio is the tax imposed by the central government and does not take
into account local taxes. In 2019, Indonesia began to adopt the definition of tax ratio
in the broad sense by starting to take into account the royalty acceptance of natural
resources as an Administration of Non-Tax State Revenue (PNBP) (Rosadi, 2019).
Based on the study in Asia, Tax-to-GDP is important because the government's
effectiveness and the quality of taxation authorities positively affect the tax ratio
(Aizenman et al., 2019). Robert Pakpahan, Director of the Directorate General of
Taxation of the Republic of Indonesia, stated that the Tax Ratio was used to measure
the government's ability to finance national needs through the State Budget (APBN)
(Kementerian Keuangan Republik Indonesia, 2019). Although the tax ratio is
relatively low, according to the data of the APBN posture Year 2016 to 2019, the tax
is always the biggest source of acceptance to the State Budget for the last four years,
with a proportion of taxes to the state budget over 80% annually (Table 1).
Table 1. The Role of Tax on Indonesian State Budget 2017 to 2020
Source: Posture Data of the State Budget by Ministry of Finance. June, 2020.
Meanwhile, Indonesia's average local tax ratio in 2018 was 1.2%. According to the
Benedictus Raksaka Mahi, this ratio is quite low compared to Australia at 4.4%
(Wildan, 2019). The tax ratio of local taxes is calculated by dividing the tax revenue
aggregation of district/city/provincial by Gross Regional Domestic Product (GRDP).
The Indonesian tax capacity from 2012-2016 is 3.26% of GRDP.
Table 2. Hotel Tax Realization Report in Yogyakarta City
Source: Financial and Assets Management Agent Yogyakarta. June, 2020.
Law Number 23 of 2014 has authorized local government through regional
autonomy, one of which is by managing local tax as a potential source of regional
revenue (Iskandar, 2016; Prasetya R & Satriyo, 2015). Yogyakarta Special Region
(DIY) Government is a regional autonomy and has the predicate as a city of education
Budget Year
Total (in IDR trillion)
Percentage
Tax: State Budget
State Budget
Tax
2019
2.165,1
1.786,4
82,5%
2018
1.894,7
1.618,1
85,4%
2017
1.750,3
1.498,9
85,7%
2016
1.822,5
1.546,7
84,9%
Year
Fiscal Budget
Realization
Percentage
2015
87,000,000,000
93.609.098.453
107.60
2016
112,000,000,000
114.772.723.848
102.48
2017
118,000,000,000
129.599.729.238
109.83
2018
146,000,000,000
150.256.960.050
102.92
2019
152,000,000,000
163,969,302,385
107.87

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(Rumani, 2018). Data from the Central Statistics Agency showed that there were 45
private colleges in the city of Yogyakarta with a total of 77,101 students (BPS DIY,
2018). These students are not only from Yogyakarta but also from outside of the area,
impacting the increasing demand for temporary housing known as a boarding houses
(Hidayat, 2017). Based on Investment and Licensing Office (DPMP) Yogyakarta data,
the total Building Permit for Rumah Kos, Indekos or Pondokan from 1959 until 2018
reached 710 boarding houses. These data are the accumulation of a boarding house
for various rooms.
Table 3. Income Tax Report of Boarding House and Building Permits in Yogyakarta
City
Category
Total Data
2015
2016
2017
2018
Building Permits
570
622
660
710
New Building
Permits of
Boarding House
35
52
38
50
Income Tax of
Boarding House
8
15
17
21
Source: Board of Financial and Assets Management (BPKAD) of Yogyakarta City and
Investment and Licensing Office (DPMP) of Yogyakarta City, December 2019.
Based on article 4 paragraph (2) of the Regional Regulation of Yogyakarta City
Number 1 of 2011, the hotel tax object includes boarding houses with more than 10
rooms with Air Conditioner so that Yogyakarta Government does not separate the
boarding house income tax from the hotel tax. The hotel tax realization data in
Yogyakarta was always above 100% from 2015 to 2019 (Table 2). Meanwhile, based
on the Finance and Asset Management Board of Yogyakarta (Table 3), only 21
boarding houses from 710 boarding houses in Yogyakarta City are paying the
boarding house tax in 2018. Based on the data above, the Yogyakarta City Government
has a high potential for boarding house tax, but it has not been optimally effective.
Table 4. Income Tax Report of Boarding House and Building Permits
in Yogyakarta City
Category
Total Data
2015
2016
2017
2018
Building Permits
570
622
660
710
New Building Permits of Boarding House
35
52
38
50
Income Tax of Boarding House
8
15
17
21
Source: Board of Financial and Assets Management (BPKAD) of Yogyakarta City and
Investment and Licensing Office (DPMP) of Yogyakarta City, December 2019.
Regional Regulations of Yogyakarta City Number 1 of 2011 on Local Tax regulates the
calculation and tax reporting of the boarding house tax in Yogyakarta City. The tax
collection system in Yogyakarta is a Self-Assessment System where taxpayers are

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required to play an active role. Normatively, Self-Assessment System is influenced by
the level of taxpayer compliance to pay taxes voluntarily (voluntary compliance)
(Arum, 2012). In this research, the tax compliance level is characterized by the
compliance of the boarding house owner. The owner of the boarding house in
Yogyakarta city has two obligations, namely paying the income tax according to
Government Regulation Number 46 of 2013 and collecting from the renter also
depositing the boarding house tax according to Article 5 paragraph (2) in Regional
Regulation of Yogyakarta City Number 1 of 2011. The indication of the boarding house
owner's low compliance level is when the realization of the boarding house tax is
lower (Ardhyanto, 2017). The integration among the government as a policymaker,
supervisor, and tax service authority with the willingness of the boarding house
owner as a collector and the tax deposit category of the boarding house is necessary
to optimize the collection of taxes (Sulistianingtyas et al., 2018).
This research is a further development of Nuraini’s (2019) research which analyzed
the influence of taxpayer perception on tax knowledge, taxpayer environment, quality
of tax service authorities, and tax sanctions on the taxpayer's compliance level. The
purposive sampling method is used to limit research subjects, research objects, and
research areas. The research subject is a boarding house owner with more than 10
rooms with air conditioner facilities in the Umbulharjo, Kotagede, Gondokusuman,
Wirobrajan, and Gondomanan sub-districts. Nuraini (2019) used survey methods and
short interviews to collect data from 32 boarding house owners. The contribution of
the research is the importance of law enforcement for hotel tax policy on boarding
houses in Yogyakarta City, as well as the separation of the tax object of a boarding
house with other tax objects. This research examined the same area of Yogyakarta
City with the same tax object: the boarding house.
Tax authorities have arranged boarding house tax through Yogyakarta City
Regulation Number 1 of 2011 on Local Tax. However, there is still a tax gap. The tax
gap is a significant difference between the building permit data of buildings and the
realization data on the boarding house. The condition indicates weak law
enforcement for the boarding house tax in Yogyakarta city.
According to Soerjono Soekanto, there are 5 (five) factors influence law enforcement.
There are the legal factor, the law enforcement officers factor, the facilities factor, the
community factor, and the cultural factor. This research adopted the tax sanctions
variable and quality tax service authority variable from Nuraini (2019), then
elaborated with three other factors of law enforcement: legal factors, law
enforcement officers, and facilities. It limits the discussion in the scope of legal
research (Nuraini, 2019). Therefore, researchers are interested in analyzing the law
enforcement of Yogyakarta City Regulation Number 1 of 2011 on Local Tax, especially
for the boarding house tax.

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The urgencies of this legal research are to analyze the enforcement of the Regional
Regulation of Yogyakarta City Number 1 of 2011 concerning Local Tax on boarding
houses by the Local Government of Yogyakarta City and to analyze the obstacles to
the enforcement of the regulation for increasing local revenue through boarding
house tax. The contribution of this legal research would give suggestions for the
Yogyakarta City Government on tax policy that the enhancement of local revenue
could be obtained through the law enforcement of Regional Regulation of Yogyakarta
City Number 1 of 2011 concerning Local Tax on boarding house tax.
Methodology
This research is empirical legal research using an empirical juridical approach.
According to Soerjono Soekanto, empirical research is classified as sociological
research, a study conducted on actual legal provisions or real conditions occurred in
society (Soekanto, 1983). After the data has been collected, the researcher then
researches legal identifications and legal effectiveness to find solutions to problems.
Primary data was obtained using field studies from August to September 2020,
through structured interviews with interviewees and informants at the Yogyakarta
City Investment and Licensing Office, the Yogyakarta City Financial and Asset
Management Agency, and the Yogyakarta City Public Order Enforcers. Structured
interviews are conducted as direct communication with interviewees who directly
handled the problem of implementing tax law enforcement on boarding houses in
Yogyakarta City. Secondary data was obtained from the results of library research by
conducting a literature study. Research locations for interviewees and key informants
are the Yogyakarta City Legal Department Office, the Yogyakarta City Investment and
Licensing Office, the Yogyakarta City Financial and Asset Management Agency Office,
and the Yogyakarta City Public Order Enforcers Office.
Data processing is conducted by selecting and classifying legal materials to get an
overview of the research results. Data analysis is conducted in a descriptive
qualitative analysis. The qualitative method analyses the data related to the problem
under study, then it is selected based on logical thinking, and the phenomenon is
described clearly and in detail. Data presentation is done using inductive deductive
logic (general-specific) and then finding the logical relationship between the related
aspects. Therefore, descriptive research will provide an overview or explanation of
the research's subject and object as the research results (Fajar & Achmad, 2015).
Results and Discussion
Enforcement of Yogyakarta Regional Regulation Number 1 of 2011 on Local Tax
to Increase Local Income
An Overview of Boarding House Tax Regulations in Yogyakarta
A hotel tax is a tax on hotel services (Octaviany et al., 2021). It includes lodging houses
that charge a fee. Article 4 paragraph (2) of Yogyakarta City Regional Regulation No.

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1 of 2011 on Local Tax mentions that the object of hotel tax includes a boarding house
with more than 10 (ten) rooms and has Air Conditioner (AC) facilities. The regulation
became a legal basis for the imposition and tax collection of boarding houses by the
Yogyakarta City Government. The judicial requirement that must meet is if the
boarding house has more than ten rooms and if it has an air conditioner. Therefore, if
the boarding house does not have more rooms than 10 (ten) or does not have air
conditioners (AC) facilities, then the Yogyakarta City Government will not impose the
boarding house tax.
The object of hotel tax based on Article 4 paragraph (1) of Regional Regulation of
Yogyakarta City No. 1 of 2011 on Local Tax is a service provided by the hotel with
payment, including supporting services. Under Article 4 paragraph (3) of the same
rules, the explanation of support services is also subjected to hotel and boarding
house tax. Not all services provided by the lodge are taxed. Article 5 paragraph (1) of
Yogyakarta City Regional Regulation No. 1 of 2011 on Local Tax mentions some
exceptions that do not include tax objects. The boarding house has more than 10 (ten)
rooms and has air conditioning facilities classified as a taxable taatbestand. Based on
Article 4 paragraph (2) of Yogyakarta City Regional Regulation Number 1 of 2011, the
boarding house is a local tax object and enters the category of hotel tax object.
Figure 1. Boarding House Tax Regulation
Law Number 28 of 2009
Regional Regulation of Yogyakarta
City Number 1 of 2011
concerning Local Tax
Hotel Tax - Article 1 par (8)
boarding house with a number of
rooms over 10 (ten)
10%
Also imposed for
additional services
Law Number 36
of 2008
Income with a
certain gross
circulation
10%
Government
Regulation
Number 46 of 2013
1%
Income Tax
Article 4 (2)
Income of Land and/or
Building Rental
Before enactment
Law No. 34 of 2017
After enactment
Law No. 34 of 2017
10 %
Land and/or
Building Rental
Specific
Services
Objective
Tax
Boarding House
Renter
(pay as you consume)
Local Government
Subjective
Tax
Boarding House
Owner
(pay as you earn)
Law Number 34 of 2017
on Income Tax from Land and/or
Building Rental
Boarding House Tax
Regulation
Central Government

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The common misinterpretations by the taxpayer regarding the local tax terms are the
subject of taxes and taxpayers because both have different legal understanding and
consequences. A tax subject based on Article 5 paragraph (1) of Regional Regulation
of Yogyakarta City No. 1 of 2011 on Local Tax is a private person or entity that may
be subject to local taxes. Thus, anyone, whether a person or entity, qualifies
objectively specified in local tax regulation will be the tax subject (Siahaan, 2004).
Taxpayers based on Article 5 paragraph (2) of Regional Regulation of Yogyakarta City
No. 1 of 2011 on Local Tax are private persons or entities based on local tax laws that
are required to make payment of taxes payable, including tax collectors or tax cutters.
Therefore, a person or entity becomes a taxpayer if local regulations have determined
him to make tax payments and a person or entity authorized to collect taxes from the
tax subject. Taxpayers can be both a tax subject and not a tax subject. Taxpayers who
are not the subject of tax are authorized to collect taxes from the tax subject.
Based on the legal factor of law enforcement concerning taxation, boarding house
taxes are classified into subjectively tax and objective tax. As a subjective tax
approach, the boarding house is classified as lodging services under Government
Regulation No. 34 of 2017. Boarding house owners with gross circulation below 4.8
billion rupiahs are subject to tax under Government Regulation No. 46 of 2013 with a
rate of 1%, while gross circulation above 4.8 billion rupiahs will be subject to tax
under income tax law (Aji, 2018). On the other hand, the objective tax is a local tax. It
is imposed on the tenant of the boarding house (consumer), while the tax collector of
the boarding house is the owner. Therefore, the owner of the boarding house in
Yogyakarta city has two obligations; paying the income tax, collecting from the renter,
and depositing the boarding house tax according to the Regional Regulation of
Yogyakarta City Number 1 of 2011 (Figure 1).
The tax type will determine whether the subject of the tax is the same as the taxpayer
or not. Article 5 paragraph (1) and Article 5 paragraph (2) of the Regional Regulation
of Yogyakarta City Number 1 of 2011 on Local Tax define that the understanding of
tax subjects and taxpayers differs. The definition of the hotel tax subject is a private
person or entity that makes payments to a private person or entity that executes the
hotel business. On the other hand, a hotel taxpayer is a private person or a Corporate
person who works for the hotel or the hotel entrepreneur. Based on these rules above
(Figure 1), the Yogyakarta City Government separates the definition of tax subjects
(tenants of boarding houses) and taxpayers (owners/entrepreneurs of boarding
houses).
The basis of the imposition of hotel tax under Article 6 of the Regional Regulation of
Yogyakarta City No. 1 of 2011 on Local Tax is the amount of payment received by the
hotel. Payment is the amount of money that must be paid by the tax subject to the
taxpayer for the sale price of both the amount of money paid and the reimbursement
that should be requested by the taxpayer in exchange for the use of lodging services
and supporting facilities related to the hotel business. Based on Article 4 paragraph

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(3), Article 6, and Article 7 of the Regional Regulation of Yogyakarta City Number 1 of
2011 on Local Tax, the imposition basis of boarding house tax as the category of hotel
tax using the income before tax obtained by the boarding house owner from the
rental, various services, and supporting facilities provided to the owner of the
boarding house (landlord). In conclusion, the tax owed on the boarding house tax
payable by the owner of the boarding house is the income that the Boarding House
owner (taxpayer) earns from the payment provided by the tenant (or payment which
should be paid to the owner of the boarding house) then multiplied by 10% (ten per
cent).
According to Article 68 of the Yogyakarta City Regional Regulation Number 1 of 2011
on Local Tax, the tax period of the boarding house is the same as the hotel tax. The tax
period is 1 (one) calendar month, which becomes the basis for calculation, depositing
tax, and reporting the tax payable. Based on the explanation above, the tax period of
the boarding house tax is at the time of the enactment of the boarding house rental or
the other service provided by the boarding house (up to one calendar month).
Based on legal factors explained above, the Regional Regulation of Yogyakarta City
Number 1 of 2011 on Local Tax clearly distinguishes taxpayer obligations from tax-
subject obligations. Precisely what makes the dilemma to carry out the provision is
the confusion in the interpretation and application of calculating the minimum
number of 10 rooms and the efficacy of air conditioners. Article 4 paragraph (2) is a
fraudulent article by taxpayers to build boarding houses with many rooms but air
conditioner facilities are given only for ten rooms. The lack of legal factors causes the
decline in local tax revenue because many boarding houses are deliberately not
included in the criteria on boarding houses in terms of air conditioner facilities.
Repressive Efforts on The Enforcement of Boarding House Tax Rules in
Yogyakarta
The imposition of repressive efforts was after the occurrence of disputes or the
appearance of losses suffered by one of the parties, whose actions were in the form of
law enforcement by imposing penalties or sanctions (Prananjaya & Narsa, 2019).
Repressive efforts aim to reduce the number of cases certain in the future (Ulfadani &
Ali, 2019).
a. Administrative Efforts in Enforcement of The Regional Regulation of Yogyakarta
City Number 1 of 2011 on Local Tax
Tax collection is done by first providing a letter of reprimand, warning letter, or
another similar letter at the beginning of the tax collection action.
1. The Issuance of The Reprimand Letter
Article 1 of the Regulation of the Minister of Finance Number 24/PMK.03/2008
concerning Procedures for The Implementation of Billing by Distress Warrant and
The Implementation of Immediate and Total Tax Collection Instruction Letter stated
that a Letter of Reprimand, Warning Letter, or other similar letter is a letter issued by

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the tax authorities to reprimand or warn the taxpayer to pay their tax payable
(Nasution & Aliffioni, 2018; Panambunan, 2016).
2. The Tax Examination
The tax examination is a series of activities to collect and process data, information,
and/or evidence implemented objectively and professionally based on a standard of
inspection to test compliance with local tax obligations and/or other purposes to
implement the provisions of local tax laws and regulations (Budileksmana, 2001).
3. Administrative Sanctions after Tax Audit
An administrative sanction is the payment of the state losses by taxpayers who violate
administrative taxation rules intending to cause deterrent effects (Susanto, 2019) for
taxpayers and increase tax compliance (Princesswara & Iskandar, 2019; Sari, 2018).
Tax administration sanctions can be in the form of fines, interest, and increases that
will be described as follows:
a) Administrative Sanctions in the form of Fines
Administrative fines are administrative sanctions imposed for violations
related to tax reporting obligations. These sanctions can generally be set at
a fixed amount, a percentage of a certain amount, or a multiplication of a
certain amount. As for several violations, administrative sanctions in the
form of fines can be supplemented by criminal sanctions. However,
violations that are subject to criminal sanctions are violations of an omission
or intentional nature.
b) Administrative Sanctions in the form of Interest
Administrative sanctions in the form of interest are imposed on taxpayers
who do not or pay less tax. Administrative sanctions in the form of interest
are imposed for violations that cause tax debts.
c) Administrative Sanctions in the form of Tax Increasement
The Administration Sanctions Increase is the sanction that causes the
amount of tax to be paid can be doubled. Sanctions in the form of increases
are calculated by a certain percentage figure of the amount of tax that is not
underpaid. If viewed from the cause, the sanction increase is usually
imposed on taxpayers who do not provide the information needed to
calculate the amount of tax payable.
Regional Regulation of Yogyakarta City Number 1 of 2011 on Local Tax
regulates the issuance of SKPDKB, SKPDKBT, and SKPDN issued by the
Mayor if, within 5 (five) years, the tax owed has not been paid. It is stipulated
in Article 71 paragraph (1) letter a, numbers 1 and 2 that taxpayers who own
boarding houses will be subject to administrative sanctions if they have the
following conditions:
1) based on the results of examination or other information on the
Underpayment of Local Tax Assessment Letter (SKPDKB), there is a
deficiency in paying taxes payable or not paying taxes owed
2) based on the Local Tax Return (SPTPD), it is not submitted to the Mayor
or appointed Official within a certain period, and after being reprimanded

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in writing, it is not submitted in time as specified in the Letter of
Reprimand.
4. Boarding House Tax Billing
Based on Article 74 paragraph (1) of Yogyakarta City Regional Regulation Number 1
of 2011 on Local Tax, tax authorities can issue Local Tax Billing Letter (STPD), if hotel
tax in the current year is not or is underpaid. If SPTPD research results showed a lack
of payment due to miswriting and/or miscalculation, and if taxpayers are subject to
administrative sanctions in the form of interest and/or fines. Based on Article 1 of
Law No. 19 of 2000, a Warrant is a warrant to pay the tax payable and tax billing fees.
The Distress Warrant is charged to the tax insurer (Ibnususilo et al., 2019). The
regulation basis used for the local tax billing is under Article 18 to Article 24 Chapter
IV of Tax Billing on the General Provisions of Taxation Law, Law No. 19 of 2000 on
Tax Billing by Distress Warrant, and Regulation of the Minister of Finance of the
Republic of Indonesia Number 207/PMK.07/2018 concerning Guidelines for Billing
and Examination of Local Taxes.
5. Imposition of Administrative Sanctions after Tax Billing
Tax authorities will impose administrative sanctions on the taxpayers who still do not
comply with tax rules by doing an illegal act in the process of tax billing under Article
74 Paragraph (1) as previously described; then, tax authorities will impose
administrative sanctions. As in cauda venenum, the core of the enforcement of state
administrative law, administrative sanctions are regulated through Article 74,
Paragraph (2) and Paragraph (3) of Yogyakarta City Regional Regulation Number 1 of
2011 on Local Tax.
6. Foreclosure/Confiscation of Taxpayers' Property of Boarding House
Law No. 19 of 2000 stated that foreclosure/confiscation is the act of tax bailiff to
control the tax insurers' goods, to be used as collateral to pay off tax payable according
to the laws and regulations. Foreclosure can be done on taxpayers' goods if the tax
payable has not also been repaid 2x24 hours after the notification of Distress Warrant
or the official issues a Foreclosure Warrant (SPMP) (Siahaan, 2004). If the goods are
insufficient, the tax bailiff would foreclosure the fixed property (Hutapea & Gaol,
2020).
7. Auction
Within 14 days after the foreclosure action, if the tax payable has not been repaid,
then it is continued with the auction action through the State Auction Office. In this
case, the forced billing fee and the cost of implementing the foreclosure for the tax
that has not been paid will be charged together with the advertising fee for the
announcement of the auction at the time by the tax insurers after two times 24 hours
since the Distress Warrant is notified to him. The official immediately issued an
Official Issues of a Foreclosure Warrant (SPMP).
b. Criminal Efforts in the Enforcement of The Regional Regulation of Yogyakarta City
Number 1 of 2011 on Local Tax
1. Criminal Provisions of Taxation

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Local tax collection can occur properly if the taxpayer is responsible for carrying out
tax obligations correctly. This ideal condition is not achievable if the taxpayer
intentionally or does not meet his tax obligations or the taxpayers' omissions.
Criminal sanctions in imposition and collection of local taxes for taxpayers who
violate local tax regulations' provisions are needed to prevent intentional and
omission conduct. These are strictly regulated in Law No. 18 of 1997 and Law No. 28
of 2009.
Based on the description of Article 174 paragraph (1) and (2) of Law No. 28 of 2009,
as well as Article 89 paragraph (1) and (2) Of Yogyakarta City Regional Regulation
Number 1 of 2011 concerning Local Tax, the criminal law committed by taxpayers
who own boarding houses if they occur as follows:
a) Not submitting the Local Tax Return (SPTPD);
b) Filling out the SPTPD incorrectly;
c) Filling out the SPTPD incompletely;
d) Attaching incorrect information.
Based on Article 175, the prosecution of criminal acts on local tax is expired after 5
(five) years from the time of tax payable, the expiration of the tax period, or the end
of the tax year concerned. The officials imposed criminal sanctions of confinement
and or fine on an omission or did not fulfil the obligation of keeping the taxpayers'
information submitted to them. This provision provides legal certainty against
criminal acts committed by taxpayers or officials, so the termination of criminal act
prosecution is 5 (five) years.
2. Boarding House Tax Investigation
Based on Article 88 paragraph (1) of The Regional Regulation of Yogyakarta City
Number 1 of 2011 on Local Tax, the Civil Servant Officer (PPNS) has special authority
as an investigator to investigate criminal acts in the field of Boarding House Tax, as
referred to in the applicable Criminal Procedural Law. The General Provisions of
Taxation regulates the provision of official obligation, criminal act, and investigation
in Boarding House Tax.
3. Implementation of Criminal Efforts in the Enforcement of The Regional
Regulation of Yogyakarta City Number 1 of 2011 on Local Tax
Based on the results of the interview with the Head of Tax Collection and Objection of
Regional Revenue Sub-Section, M. Rohmad Romadhon, the enforcement of criminal
provision on Local Tax stated in Article 89 paragraph (1) and (2) Regional Regulation
of Yogyakarta City Number 1 of 2011 on Local Taxation by the Regional Board of
Financial and Assets Management of Yogyakarta City has not done yet. The obstacle
of the criminal provision's implementation is inhibited by the limited human
resources or expertise, for example, the absence of bailiffs in the Regional Board of
Financial and Assets Management of Yogyakarta City. The bailiff's task is to conduct

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confiscation on non-compliance boarding house taxpayers. The enforcement of
criminal efforts in Yogyakarta City has not reached the imposition of criminal law.
Factors of Enforcement of the Regional Regulation of Yogyakarta City Number 1
of 2011 on Local Tax
Based on the Five Principles and the 1945 Constitution, the legislation contains
primary values such as justice, benefit, and legal certainty. The core values at the first
level are the values stated in the Five Principles. The first value stated in the Five
Principles has constructed the second level value. The second value is the value
contained in the 1945 Constitution that is explained below:
a. The Value of Justice Principle
Justice has the sense of putting something in place and providing something that is a
right to the subject of law relating to the principle of equality before the law. Justice
is the highest value of the legal value category. Thus, the most fundamental value of
justice is to provide (equality and fairness) equal conduct and fair opportunities to
everyone (Devos, 2009). Social justice is the peak of the law goals, so practice should
not prioritize individual justice and rule out social justice. The establishment of the
sense of justice is fulfilled through two efforts, formal and substantial. The justice
relating to the legislation is the justice formally, while how the regulatory system
formulates justice and how the Judge decide cases are the justice substantially
(Lailam, 2017).
b. The Value of Legal Benefit Principle
The legal constitution and the law construct to achieve justice and benefit the
community's interests. Therefore, the formation of regulations should consider
people's interests. Justice value is analyzed using the utility value, as described based
on Article 28H paragraph (2) of the 1945 Constitution "Everyone deserves
convenience and specialty conduct to obtain equal opportunities and benefits to
achieve equality and justice. Another element for assessing the legal benefit principle
is to evaluate whether the rule violates the value of human nature or not. The
discussion above concludes that the legal benefit principle is an effort to achieve the
law's goals and realize what is beneficial for the people and meet the value of justice
(Lailam, 2017).
c. The Value of Legal Certainty Principle
The legislation is a fundamental instrument in legal action and law enforcement, and
even one of the main objectives is to create legal certainty. The requirement of legal
certainty in the legislation are: a) the formulation clearly; b) consistent in its
formulation both internally and externally (semantic relationship, fulness of
composition and language); c) the use of appropriate and easy-to-understand
language, d) the clearness of legal language: meaning, structure, and terms used to
ensure legal certainty. To analyze the enforcement of the Regional Regulation of
Yogyakarta City Number 1 of 2011 concerning Local Tax, the legal system theory
developed by Lawrence Friedman is used. A regulation is in ideal condition if it meets
the components of the legal system. Therefore, the enactment of the Regional

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Regulation of Yogyakarta City Number 1 of 2011 concerning Local Tax is reviewed
based on three law components, namely: the structure of the law, the substance of the
law, and the culture of the law (Darnela, 2015).
1. Substance of Law
The law substance is the rules and norms drawn up by parties/people in the
legal system. The law substance is interpreted by the legal material itself that
are several requirements for the law to be implemented effectively by the
community (Supeno, 2017). A legal norm becomes valid if created by an
authorized institution and based on a higher norm level (Lailam, 2017). The
fundamental criteria of a regulatory substance consist of: a) Philosophical
Foundation; b) Sociological Foundation; and c) Juridical Foundation. Therefore,
the substance analysis in the Regional Regulation of Yogyakarta City Number 1
of 2011 on Local Tax uses the three foundations above. Legal norms contained
in the establishment of the Regional Regulation of Yogyakarta City Number 1 of
2011 on Local Tax which attributed to Lawrence Friedman's opinion that the
substance of the law has several indicators such as the following:
a) The law substance is used to review whether the law can be implemented
and whether it contains elements of justice and non-discriminatory
elements and ensures the protection of rights and obligations in a balanced
manner.
Based on the philosophical basis of the enactment of regulation in Indonesia,
the Five Principles value as the basic norm / rechtsidee becomes a place of
depending on the legal norms under the Five Principles and implies that the
legal norm under it should not be contrary to the value of Five Principles. In
the control of people's behaviour to comply with the rules, according to the
Head of Law Department of Yogyakarta City, Rahmat Setiabudi, the
procedure of administrative sanctions is considered easier than criminal
sanctions by the taxpayer because taxpayers only need to take care of the
cottage permit and then report how underpaid or how long the delay to then
pay the administrative sanction. Based on the discussion above, the criminal
sanctions are not implemented in enforcing the Regional Regulation of
Yogyakarta City Number 1 of 2011 on Local Tax, reviewed on a philosophical
basis, the absence of imposing criminal sanctions causes the limitation of the
justice principle fulfilment.
b) The law substance is used to review whether the substance of the regulation
is in the people's interest.
Based on the sociological perspective of establishing regulation in Indonesia,
the testing of regulatory content uses aspects of textual and societal
approaches or sociological approaches to law and social behaviour of the
community (Cotterrell, 1983). Based on the opinion of Rahmat Setiabudi to
the case of taxpayers who intentionally prepare boarding houses business
to have rooms above 10 (ten) but provide air conditioning facilities below 9
(nine) rooms, it does not meet the minimum threshold to classify as an

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exclusive boarding house. However, people do not understand the tax
function and tend not to meet their tax obligations. Logically/pros logic, the
legal process must run according to principles and logic that the government
could not act on such cases as a violation of the law, especially for the
investigation process that needs to know the mens rea or the intention of the
subject of law for action. Based on the explanation of Rahmat Setiabudi
mentioned above, the society is less accepting of the imposition of boarding
house tax regulated by the Regional Regulation of Yogyakarta City Number
1 of 2011 on Local Tax. It can be concluded that there is a substantial conflict
of interest between the sociological aspect and the legal benefit aspect of this
rule.
c) The substance of the law is used to explain whether the existing rules are
constitutionally justified.
According to Sudikno, the legal norms are created as a social control tool to
maintain the order of security, tranquillity, and social engineering to renew
behaviour and build human civilization. The legal material in the legal norms
is different from other norms. The substance of legal material can be adhered
to by coercive criminal sanctions imposed by state officials (Gibbs et al.,
1968). According to Rahmat Setiabudi, the legal drafting of regional
regulations is conducted by the Mayor of Yogyakarta City as the government
(executive) and the House of Regional Representatives (legislative).
Consistently, establishing the Regional Regulation of Yogyakarta City
Number 1 of 2011 on Local Tax has been futuristic by considering the
criteria of exclusive boarding houses with Air Conditioner (AC) facilities and
rented above 10 (ten) rooms. However, these conditions are now less
relevant because air conditioning is commonly used. The solution to
separate the classification of boarding house tax with hotel tax criteria may
be possible; it causes inefficiencies in existing regulations. It can be
concluded that the legal norm of the Regional Regulation of Yogyakarta City
Number 1 of 2011 on Local Tax is considered to no longer contain a blanket
norm or black/hazy norm because there is certainty about the minimum
limit of the number of air conditioning facilities and rooms to be subject to
boarding house tax.
2. Legal Structure
The structure of the law consists of the form of a legal system. Understanding
the legal structure is an effort to make the law effectively enacted so that the
concrete form of the legal structure is the existence of legal institutions that
draft and conduct existing laws. Lawrence Friedman (Supeno, 2017)
categorized the legal structure into several indicators, such as the following:
a) The law structure requires law enforcement to have a good education,
b) The law structure requires that law enforcement be responsible for its
profession,

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c) The law structure requires that law enforcement be capable of solving legal
cases and have a sense of public problems.
In this study, aspects of legal structure are reviewed based on factors of law
enforcement officers and the quality of tax service authorities (Mahi, 2015). The
first explanation is about the factors of law enforcement officers. Based on
Regional Regulation No. 1 of 2011 on Local Tax and The Mayor Regulation of
Yogyakarta No. 108 of 2016 concerning Procedures for Regional Tax
Inspection, officials who are authorized as tax authorities to carry out the
process of tax collection, tax inspection, and tax collection in the city of
Yogyakarta are the Regional Board of Financial and Assets Management of
Yogyakarta City. The legal structure component for boarding house tax
regulation in Yogyakarta is the law enforcement officer consisting of the
Regional Board of Financial and Assets Management as the main party and
assisted by the Public Order Enforcers Yogyakarta City, 14 Sub-District in
Yogyakarta city as well as the Investment and Licensing Office of Yogyakarta
City. Tax violations sanction should be imposed by the local tax regulation
without exception whether there is the absence of bailiffs or not, namely by
gijzeling (standoff) and tax sanctions to create legal certainty (Fontian, 2015).
The legal structure of the legal system also correlates with the quality of the tax
service authority factor. Based on the interview, the tax authorities in
Yogyakarta City provide some facilities in the framework of local tax collection
are 1) socialization conducted by the tax authority in collaboration with the
sub-district and the Public Order Enforcers of Yogyakarta City, 2) the online tax
system through e-SPTPD so that taxpayers can fulfil the obligations of tax
reporting and tax payment online, and 3,) the presence of Optical Character
Recognition (OCR) in the taxpayer payment system.
Based on the perspective of the legal structure discussed above, the
implementation of the enforcement of boarding house tax regulations in
Yogyakarta City for factor service quality of tax authorities and law
enforcement officers is considered to have adjusted the public needs (as a legal
benefit) and legal certainty, while does not provide justice to the community.
3. Legal Culture
According to Roger Cotterrell, legal culture is the diversity of ideas, values, and
attitudes about the law in various communities and its position in the social
order (Rahman & Tomayahu, 2020). The concrete condition of legal culture is
the public enthusiasm to entrust the dispute settlement to the courts. Legal
institutions can be judged to have the same functions but practically can
perform different roles in society (Surbakti & Hum, 2006). Based on this
explanation, Supeno, quoting Lawrence Friedman (Supeno, 2017), categorized
legal culture principles into several indicators as follows:

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a) The community assesses legal culture according to legal awareness (religion
and habits) that develop in society.
b) Legal culture requires socialization to convey information and increase
public knowledge about legal content (Ulfadani & Ali, 2019).
c) The community needs legal culture to solve community problems and get a
positive response from the community.
The existing legal culture of the boarding house owner is if the tax authorities
perceived the service directly to the taxpayers. Related to these conditions and
to increase tax service quality, tax authorities in Yogyakarta provide various
facilities that make it easier for taxpayers to meet their tax obligations. Tax
authorities provide socialization on taxation, tax call centre media, and online
tax access (e-SPTPD). Tax authorities have different functions for each existing
tax object. For example, tax authorities only provide Optical Character
Recognition (OCR) facilities for certain tax objects. In addition to considering
the cost-to-benefit principle as described earlier, it also creates legal fairness in
tax collection. Based on the perspective of legal culture as discussed above, it
can be concluded that the implementation of the enforcement of boarding
house tax regulations in Yogyakarta City for factor service quality of tax
authorities, law enforcement officials, and tax sanctions have adjusted the
public needs (as a legal benefit) and legal certainty while does not provide
justice to the community.
4. Research Result Framework
The following is a chart of the implementation of boarding house tax
regulations in Yogyakarta City based on the relationship between law
enforcement factors, legal system components, and perspectives on the
fundamental values of legislation:
Figure 2. The Relationship of Law Enforcement Factors
Law Enforcement
Officers
Facilities or
Media
Law or Tax Policy
the machine of law
system (institutions)
Structure
ideas influence the
behavior
Cultural
law norms as the
result of legal system
Substance
yuridical
philosophical
sociological
Law
System
Components
Law Enforcement
Factors
Legal
Benefit
Legal
Certainty
Justice
Law Enforcement
Elements

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The Obstacles of the Enforcement of the Regional Regulation of Yogyakarta City
Number 1 of 2011 to Increasing Local Revenue through Boarding House Tax
Internal Law Enforcement Factors
a. Legal Factors
1. Lack of legal benefits element due to the hotel regulation restrictions on the
number of hotels in the city of Yogyakarta based on Yogyakarta Mayor
Regulation No. 111 of 2019. The regulation stated that the building permit
service is temporarily suspended for building new hotel buildings from January
1 to December 31, 2020. The rule could result in the misappropriation of
boarding house permits. Business owners who will apply for a hotel permit
switch to applying for a boarding house permit with a daily rental system. This
risk opportunity is utilized by boarding house owners to submit income tax
monthly like hotel tax rules and does not submit income tax daily.
2. Lack of legal benefits and legal justice due to the boarding house must have a
minimum of 10 (ten) rooms and air conditioning facilities. The criteria for
boarding houses must have a minimum of 10 (ten) rooms with air conditioning
facilities, causing the potential condition of tax avoidance. Taxpayers can
prepare to construct boarding houses by building any number of rooms, but
taxpayers deliberately provide air conditioning facilities for boarding house
rooms for under 10 (ten) rooms. Tax authorities are unlikely to collect taxes
from high-income taxpayers, but the mens rea is not proven to be cheating by
eliminating air conditioning facilities for boarding house businesses. The
taxpayers who have boarding houses with more than ten rooms and air
conditioning under ten can have a higher income than taxpayers who have
boarding houses with rooms and air conditioning of more than ten rooms.
However, taxpayers with boarding houses with more than 10 (ten) rooms with
air conditioning under 10 have no obligation to pay taxes. Therefore,
Yogyakarta has the potential local revenue received from approximately 700
boarding houses, but not all of them become the object of local taxes. It can be
concluded that the criteria for the number of rooms and boarding house
facilities indirectly cause the potential tax revenue for boarding houses
decreases and lack of legal justice.
3. Lack of legal fairness due to the low level of the imposition of sanctions against
violations of boarding house tax. Based on the Regional Regulation of
Yogyakarta City Number 1 of 2011 on Local Tax, the enforcement of the
boarding house tax process is based on the Regional Regulation of Yogyakarta
City Number 1 of 2011 on Local Tax consists of the administrative process and
criminal process. Board of Financial and Assets Management Yogyakarta has
never charged for criminal boarding house tax sanctions because taxpayers
have fulfilled their tax obligations with a Reprimand Letter. The
implementation of tax sanctions is limited to the imposition of administrative
sanctions. The boarding house tax inspection and collection have never been

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subjected to the Local Tax Underpayment Assessment Letter (SKPDKB), the
Additional Local Tax Underpayment Assessment Letter (SKPDKBT), and the Nil
Tax Assessment Letter (SKPDN). This is an indication of the lack of assertive tax
authorities in imposing administrative sanctions. As a result, administrative
sanctions already stated in the Regional Regulation of Yogyakarta City Number
1 of 2011 on Local Tax do not cause fear and deterrence and can potentially
cause low levels of taxpayer compliance.
b. Law Enforcement Officer Factor
1. The lack of coordination between institutions due to authorized institutions
granting permits, tax collection, and law enforcement are different institutions.
Sub-District granted the cottage permit, the Investment and Licensing Office of
Yogyakarta City granted building permits, The Regional Board of Financial and
Assets Management of Yogyakarta City conducted tax collection, and the Public
Order Enforcers Yogyakarta City and Civil Servant Officials conducted law
enforcement. Lack of coordination and an un-integrated data system caused the
boarding house licensing data from the Investment and Licensing Office of
Yogyakarta City cannot be directly received by The Regional Board of Financial
and Assets Management of Yogyakarta City. Tax arrears data are also not
directly known by the Public Order Enforcers Yogyakarta City and Civil Servant
Officials.
2. A limited number of tax authority personnel in the Regional Board of Financial
and Assets Management of Yogyakarta City, the law enforcement officers in the
Public Order Enforcers Yogyakarta City is disproportionate with the number of
tax objects and duties that are carried out against violations of boarding house
tax becomes hampered.
3. Yogyakarta City Government does not yet have a tax bailiff. The absence of
bailiffs becomes a significant obstacle to enforcing tax regulations in
Yogyakarta City. The bailiff can only do some processes related to billing,
foreclosure, and tax auction.
c. Tax Facilities Factor
1. Lack of justice due to OCR facilities available has not been evenly distributed.
OCR facilities require high investment, but these facilities are only available for
some high-income tax objects only.
2. There are no maximum tax collection efforts due to no warning of payment due
and online reprimand letter if the taxpayers are paying the tax late.
External Factors of Law Enforcement
Taxpayer Factors
a. Taxpayers are not in the city area of Yogyakarta, causing calls to non-compliance
taxpayers to be impeded.
b. Lack of understanding of taxation by taxpayers (boarding house tenants) and tax
subjects (boarding house tenants). In implementing boarding house tax, taxpayers

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do not understand the imposition of administrative sanctions for boarding house
objects.
Conclusion
The Yogyakarta City Government's efforts to enforce the rules of boarding house tax
to increase local revenue are based on Regional Regulation of Yogyakarta City
Number 1 of 2011 on Local Tax. According to Soejono Soekanto, this research
concluding based on three law enforcement factors such explained before. First, the
tax authorities and law enforcement officers conduct the data collection of tax objects,
provide local tax socialization, provide the online tax system through e-SPTPD for tax
reporting and tax payment online, monitor local tax payments, and provide Optical
Character Recognition (OCR) in payment system, issue the Reprimand Letter, and tax
examination as the facilities factor of law enforcement. Second, the enforcement of
boarding house tax rules as the law enforcement officer factor is conducted by the
Sub-District, the Investment and Licensing Office of Yogyakarta City, the Regional
Board of Financial and Assets Management of Yogyakarta City, the Public Order
Enforcers Yogyakarta City, and Civil Servant Officials. Third, the application of
boarding house tax sanctions in the city of Yogyakarta as the legal factor is the
administrative sanction in the form of a Letter of Reprimand under the Regional
Regulation of Yogyakarta City Number 1 of 2011 on Local Tax. So far, there has never
been a criminal sanction in Yogyakarta because its application is not as easy as the
administration sanctions. The conclusion is that the enforcement of boarding house
rules has not been implemented optimally because the Yogyakarta City Government
has not conducted tax collection under the Regional Regulation of Yogyakarta City
Number 1 of 2011 on Local Tax.
The obstacles included as internal factors are the lack of legal justice due to the
minimum criteria of boarding houses rooms and air conditioning facilities, the lack of
legal justice and firmness in conducting the tax sanctions, and the restrictions on the
number of hotels in Yogyakarta. The internal obstacles of law enforcement officers
are the limited number of tax authority personnel, the absence of a tax bailiff, and the
lack of coordination between institutions. The internal obstacle of facilities factor is
the absence of facilities due to online payments and reprimands. The external factor
obstacles are that taxpayers are not in the Yogyakarta City area, and taxpayers do not
understand the imposition of administrative sanctions for boarding house objects.
The recommendations of this study are explained relating the facilities, law
enforcement officers, and legal factors. Based on the facilities factor, the Yogyakarta
City Government should increase tax service facilities distribution. Tax collection
facilities must be accessed online to create accessibility, accountability, and efficiency.
Based on law enforcement, Yogyakarta City Government should increase supervision
over boarding house licensing, rental system, number of rooms, air conditioning
facilities, and compliance to pay taxes. Sub-District, the Investment and Licensing
Office of Yogyakarta City, the Regional Board of Financial and Assets Management of

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Yogyakarta City, the Public Order Enforcers Yogyakarta City, and Civil Servant
Officials to strengthen coordination between agencies and conduct joint evaluations
to enforce boarding house tax rules. Based on the legal factor, Yogyakarta City
Government shall impose criminal and administrative sanctions against non-
compliance boarding house taxpayers. Yogyakarta City Government to develop
regulations that specifically discuss boarding house tax with the relevant conditions
of income, facilities, and room number, also adjusted to tax sanctions theory.
Acknowledgement
The authors would like to thank Universitas Muhammadiyah Yogyakarta Library for
the resources provided to conduct this research. Sincere gratitude also goes to
anonymous reviewers and editors who have provided constructive feedback so that
this manuscript looks worth reading and citing.
Declarations
Author contribution : Author 1: initiated the research ideas, literature review,
instrument construction, data collection, data presentation
and analysis, and draft writing; Author 2: revised the
research ideas, literature review, data presentation and
analysis, the final draft, and corresponding with the journal.
Author 3: reading and providing constructive feedback to
the final draft.
Conflict of interest : The authors declare no conflict of interest.
Additional information : No additional information is available for this paper.
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P-ISSN: 1412-6834
E-ISSN: 2550-0090
Volume 13, Issue 1, 2022, pp. 122-144
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