Finance Ministry Fiscal Balance Director General Astera Primanto Bhakti said the plan was part of an omnibus bill on taxation that would overhaul regional taxation as the government seeks to provide certainty to investors.

“If a regional administration’s policies are not in line with the national fiscal policy then we will impose sanctions, such as by [cutting] the regional transfer amount or revoking the bylaws,” Astera said during a press briefing in Jakarta on Tuesday.

“This will prevent excessive tax collection from businesses by the administrations,” he added.

Several regional administrations, he went on to say, unnecessarily taxed companies for water use, for instance. "We may set fixed tax rates across the country to prevent such cases."

The government submitted the draft of the bill on taxation to the House of Representatives for deliberation last week. However, the draft has yet to be made public.

Read also: Indonesia plans sweeping tax reforms for 'expatriate' income, dividends, penalties

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