Since 2011, the Indonesian government has launched a new regulation on the transfer of land and property tax collection authority (BPHTB) and urban and rural property tax (PBB-P2) from central to local government. This policy is the embodiment of the era of decentralization since 1999. After extensive discussions for 10 years, the central government is now ready to give local governments the power to collect and manage property taxes as their own sources of income. income. For this purpose, the transfer of two components of property taxes, namely BPHTB and PBB-P2, as a local government authority, is regulated by Law No. 28/2009 on Local Government Taxes and Fees. However, this process will not go smoothly as planned. Central and local government will face challenges that can suppress the transfer of authority. This paper aims to analyze the impact of the transfer of tax authority, the challenges that the local government should address, as well as the measures that the local government should take as a solution to the challenges.Background: Property taxes in Indonesia Property taxes in Indonesia are known as Pajak Bumi dan Bangunan-PBB (land and building tax). It is levied on the capital value of land and buildings. Tax liability is broadly defined as falling either to the owner and/or beneficiary of the land and/or building. Property taxes in Indonesia are regulated by Law No. 12/1994. According to the purpose of taxes, property tax and construction tax consist of:1. Land and building tax (PBB)1. Urban and Villages (PBB-P2)2. Forestry3. Mining4. Agriculture2. Land and Land Property Fees (BPHTB)Collection Previously, property tax collection was decentralized...... middle of paper...... InterScienceMikesell, J. 2011. Tax Administration. Boston, Mass. : Wadsworth/Cencage LearningRepublic of Indonesia, 2009. Law Number 28/2009 on Local Government Taxes and FeesRepublic of Indonesia, 1994. Law Number 12/2004 on Property TaxesRepublic of Indonesia, 2013. Financial Note and Indonesia Budget financial year 2013. Online references: Pendaerahan PBB http://www.bppk.depkeu.go.id/webpajak/index.php/artikel/ok-pbb/1082-pendaerahan-pbb (accessed: November 13, 2013) Meninjau Kembali Pemekaran Wilayah (Daerah Otonom Baru) http://otda.bappenas.go.id/index.php?option=com_content&view=article&id=124%3Apemekaran-wilayah-dob&catid=1%3Alatest-news&lang=in (accessed November 10, 2013) Why the neutrality of civil servants is essential http://www.thejakartapost.com/news/2001/01/12/why-civil-servants039-neutrality-a-must.html (accessed November 10 2013)