Land and Property Tax in Indonesia
Land and Building Tax
One of the most important elements if you owned land and building, is tax. Land and Property Tax System in Indonesia is referred to as Pajak Bumi and Bangunan or Land and Building Tax (Hereinafter called PBB).
The PBB object is the land and or buildings meanwhile, the subject is a person or entity that actually has the right to the land, and or has the benefit from the land. In addition, they also owning, controlling, and or obtaining benefits from the building.
The land and building tax is a state tax that is mostly a regional income which is used for the provision of facilities that are also enjoyed by the central government and local governments (Explanation of article 3 paragraph 2 Act Number 12 Year 1985 About PBB).
The tax rate imposed on the tax object is 0.5% (zero point five percent).
Apparently there are also tax objects that cannot be imposed by the PBB. However, such tax object must have certain criteria listed in Act Number 12 Year 1994 about the Amendment to Act Number 12 Year 1985 About PBB.
Here is a list of these criteria:
|1.||Used solely to serve the public interest in the field of worship, social, health, education, and national culture, which is not intended to gain profit,|
|2.||It is used for graves, ancient relics, or similar to that,|
|3.||Protected forests, nature reserve forest, jungle tour, national parks, grazing lands controlled by a village, and state land that has not been encumbered with rights,|
|4.||Tax objects are used by diplomatic representatives, consultants based on the principle of reciprocity,|
|5.||The tax object is used by the agency or representative of an international organization determined by the Minister of Finance.|
Taxes on The Transfer of Land and or Building Rights
During the buying and selling transactions, its activities not only accept or give money worth of agreed land price. Because, there are other costs that should be borne namely the land buy and sale tax. The land buy and sale tax is a levy that must be paid by the sellers and buyers pay for the land that is the object of the buy and sale. The tax payable by the seller is called the Income Tax from the Transfer of Title Land and or Building (PPh), while the tax payable by the buyer is called Acquisition Duty of Right on Land and Building (BPHTP).
1. Seller: Income Tax From The Transfer of Title Land and or Buildings (PPh)
Income tax must be paid for income which is received or acquired by a person or entity from the transfer of land and or building rights (Government Regulation Number 48 Year 1997 About Payment of Income Tax on Income from The Transfer of Land and or Building Rights).
Government Regulation Number 34 Year 2016 About Income Tax on Income from the Transfer of Land and or Building Rights, The Binding Agreement on the Land and or Building with it’s Changes, the amount of income tax from the transfer of land and or building rights are:
|1.||2.5% (two points of five percent) for buildings other than simple houses or simple flats conducted by taxpayers whose principal business is to transfer rights to land and or buildings,|
|2.||1% (one percent) for simple houses or simple flats conducted by taxpayers whose principal business is to transfer rights to land and or buildings,|
|3.||0% (zero percent) for transfer of rights to land and or buildings to the government, BUMNs that get special assignments from the government, or BUMD who get special assignments from regional heads.|
2. Buyer: Acquisition Duty of Right on Land and Building (BPHTB)
BPHTB is a tax imposed on the acquisition of land and or building rights. Acquisition of land and or building rights are acts or legal affair resulting in obtaining rights of land and or buildings by a person or entity (Act Number 20 Year 2000 About Amendment of Act Number 21 Year 1997 About Acquisition Duty of Right on Land and Building).
Tax object which is not subject to the acquisition of rights on land and building is the tax object obtained by:
|1.||Diplomatic representatives, consulates based on the principle of reciprocal treatment,|
|2.||State for government administration and or for the implementation of development for public interest,|
|3.||The agency or representative of an international organization established with the Ministerial Decree on the condition of not running a business or undertaking any other activities outside the functions and duties of the agency or representatives itself,|
|4.||Personal or entity due to the conversion of rights or due to other legal acts in the absence of name changes,|
|5.||Person or entity because Wakaf,|
|6.||Person or entity used for the sake of worship.|
BPHTB rate is 5% of NJOP (Sales Value of Taxable Object) which has reduced Acquisition Value of Non-Taxable Object.
Indoned Consultancy can assist you in the buying and selling process include the tax of seller and buyer in Indonesia. Indoned Consultancy always give best advice and solution regard to your plan to doing business in Indonesia. Indoned Consultancy is one of business consultant in Indonesia which provide various services as well. Our team will always able to help each of your business processes. Our team always provides the latest regulation that apply in Indonesia so that you will feel comfortable when doing business in Indonesia.
The information provided here is based on our long experience. In addition, the process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. In either case please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.