Property Ownership Possibility


Difference HGU and HGB


I. Definition

  • Cultivation Rights (HGU) is the right to cultivate land directly controlled by the State, within the period referred to in article 29, for agricultural, fishing or livestock enterprises (Article 28 paragraph (1) of Law 5/60 About the Law Main Agrarian).
  • Building Right (HGB) is the right to establish and own buildings on land which is not his own, with a maximum period of 30 years (Article 35 paragraph (1) of Law 5/60 on Basic Agrarian Law).


II. Validity Period

  • The validity period for HGU is a maximum of 25 years and may be the longest extension for 25 years. (Article 29 of Law 5/60 on Basic Agrarian Law).
  • The validity period for HGB is 30 years and can be extended for a maximum of 20 years. (Article 35 of Law 5/60 on the Basic Agrarian Law).



The taxes imposed on the use of HGU and HGB are the Property tax (PBB) of 05% x taxable sale value (NJKP). Where the calculation for NJKP is:

  • 40% x NJOP, special to the object of housing land which is individual taxpayer with NJOP more than Rp., – (one billion rupiah), the object of estate taxes whose land area is equal to or greater than twenty five hectares (25 Ha), owned/ controlled by BUMN, BUMS, or based on the cooperation between the government and the private sector, forestry taxes object but excluding logging block areas in the framework of implementing forest concession rights activities.
  • 20% x NJOP special tax object less than Rp 1,000,000,000, – (one billion rupiah), for mining tax object.

Indo-Ned Consultancy will always update you with the latest tax tariff and tax rule in Indonesia.

IV. Allotment

  • Cultivation Rights can only be used for agriculture, fishery and livestock business.
  • Building Rights for all businesses that require construction / building on the business undertaken.


V. Procedure Of Defense

A. Cultivation Right:

  • The applicant submits a location permit to the local government where the location of the land is submitted.
  • The applicant submits a written application to the authorized Officer through the Head of the Provincial Directorate of Agrarian Affairs concerned, with a copy to the Head of the Regent c.q. Head of Sub Directorate of Agrarian Affairs concerned
  • Regarding the completeness of the statements shall apply in accordance with the completeness of the information in the application of property rights and supplemented with the details, as follows:
      • About the company’s bonafidity and liquidity.
      • Short-term and long-term land management plan.
      • Available experts.
      • Recommendations from the agencies deemed necessary.
  • Upon receipt of the application file for cultivation rights, then also applies the procedure of settlement of the application of Right of Business according to the procedure of settlement of the Hak Milik application.
  • Section of Land Registration or Sub Directorate of Land Registration shall make a picture of the situation of the land concerned which is used as consideration by the Land Inspection Committee.
  • In the event that all requirements of the application for the granting of cultivation rights are complete, the Head of the Provincial Agrarian Directorate together with other agencies which are the Land Inspection Committee for Business Land Use shall conduct a local inspection of the land being petitioned.
  • If all statements are complete and there is no objection to granting the petition, whereas the authority to decide shall be with the Governor of the Region, shall immediately issue a decree granting the Right of Use to the land and recorded in the special register.
  • The general terms of granting of Property also apply to the granting of cultivation rights.
  • If the authority to give a decision on the application of the cultivation rights is present to the Governor of the Head of Region, but the conditions are not met, then the application is revoked and the provision of the Settlement of the Application for right of ownership also applies to the settlement of the Application for cultivation rights and registration.


B. Registration Process of Building Right:

  • Prepare requirements (Application form, Copy of ID Card, Copy of Family Card, Copy of Company Register, Copy of deed of establishment and legalization of Legal Entity, Land Acquisition License, Land Acquisition Proposal, Photocopy of SPPT, PBB of Current Year, Proof of SSB / BPHTB, Proof of Paid money entry registration, Proof of SSP / PPh, Statement of land not in dispute, Statement of land controlled physically).
  • If the designation in the right of ownership is agriculture and the company that is on behalf of SHGB is engaged in other field, then the land use change is allotment of land first (aspect).
  • After completion of the aspect process, it is continued on the registration of the decrease of rights (at this stage the payment of BPHTP and PPH from the transfer of rights must be done because the tax payment is made as one of the conditions for the process of decreasing the rights can be completed).
  • The data will be met by the land agency, if the data is complete then the local land agency will issue certificate of building rights (SHGB) on behalf of the listed company.

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