A function- and benefit-based PBB-P2 fiscal treatment model for productive waqf assets

Abstract

The fiscal treatment of productive waqf assets under Indonesia's Rural and Urban Land and Building Tax (PBB-P2) raises a classification problem because income-generating activity does not necessarily indicate private commercial orientation. This study examines the normative disharmony between the PBB-P2 regime and waqf law, analyzes implementation, interpretation, and regulatory gaps in the management of productive waqf at Daarut Tauhiid Bandung, and formulates a function- and benefit-based fiscal treatment model. A non-doctrinal socio-legal approach was used by integrating analysis of statutory and local regulatory materials with interviews and institutional-practice examination. The analysis identifies three connected gaps. The implementation gap arises from the absence of sufficiently operational criteria for mixed social-economic assets; the interpretation gap concerns the meaning of profit when economic surplus is returned to waqf purposes; and the regulatory gap concerns the lack of a fiscal classification mechanism that links productive use to the distribution of public benefits. The study proposes a Functional-Benefit Assessment (FBA) that evaluates legal status, actual function, economic activity, economic orientation, use of income, beneficiaries, public benefit, governance, and compliance. The model classifies productive waqf into socially dominant, mixed-function, and predominantly commercial categories, with fiscal treatment adjusted proportionately within the limits of applicable law.