Labuan Bajo Entrepreneurs Suspected of Dishonest Tax Payments

Regent Edi Endi of Manggarai Barat has exposed a range of schemes by business operators that hinder the realisation of local own-source revenue (PAD) from taxes. These include reporting that does not match actual receipts and refusals to allow data checks of transactions by the Manggarai Barat Regional Revenue Agency (Bapenda).

He made the remarks during a socialisation event on Optimising Local Own-Source Revenue (PAD) sourced from Local Taxes in Labuan Bajo on Wednesday, 4 March 2026.

‘The first challenge is reporting that does not reflect the realisation,’ said Edi Endi. He noted that some business owners or managers do not report taxes in line with actual receipts, and he even questioned this to the Manggarai Barat District Attorney’s Office and the Manggarai Barat Police Deputy Chief who attended the event. ‘If money from consumers earmarked for tax is not passed on, is this also categorised as corruption?’ he asked.

Edi Endi disclosed other schemes, such as partial reporting deliberately adopted by operators who instruct staff to report only 20 percent of the total tax receipts that should be reported, a practice he noted as worrying.

In addition, there are operators who refuse to open data on transaction recordings when requested for inspection by Bapenda officers who have been issued with task letters. He urged all operators and managers to cooperate. ‘For the purposes of inspection or investigation there is no reason to refuse,’ he emphasised.

If a persuasive approach does not yield results, the government will take coercive measures as a last resort. ‘The last resort is coercive measures. Again, this is not a preferred option. The questions will only grow and never end; how could we allow this to happen? If we all comply, this story will not happen in this district either,’ Edi Endi said.

Another tactic involves excuses such as damaged recording equipment or coordination issues with vendors to delay tax reporting.

The PAD socialisation targeted all stakeholders in the tourism sector, including hotel owners and operators, restaurants, lodgings, and sightseeing boats in Manggarai Barat. The programme is a response by the regional government to fiscal autonomy challenges amid shrinking central transfers.

The Manggarai Barat Regency Government is now stepping up PAD optimisation in light of reductions in central-to-regional transfers. Edi Endi emphasised the need for collaborative approaches and digital innovation to enhance local tax revenue as a major PAD source.

He explained that central-to-regional transfers have declined significantly over the past four years. ‘This situation compels every region to strengthen its fiscal capacity through PAD,’ he said.

PAD optimisation also has implications for Law Number 1 of 2022 on the Financial Relations Between the Central Government and Regions. The rule limits the allocation for employee salaries from central transfers to 30 percent. ‘This provision results in reductions in budgeting for civil servants and contract workers in almost all districts,’ Edi Endi asserted. ‘Regions are required to boost their fiscal capacity, known as PAD,’ he concluded.