Page 2 - Newsletter (Increased Housing Price Thresholds for VAT Exemptions)

DDTC Newsletter Vol.01 | No.08 I June 2019 Page 2 of 7

Increased Housing Price Thresholds for VAT Exemptions

Increased Housing Price Thresholds Table 1 - Housing Price Thresholds for VAT Exemptions of
for VAT Exemptions Modest and Very Modest Houses

No Zones 2019 2020
The government has again raised the thresholds of house Rp Rp
prices entitled to value added tax (VAT) exemptions.
1 Java (except Jakarta, 140 million 150,5 million
The increase is regulated in the Minister of Finance
Bogor, Depok,
Regulation No. 81/PMK.010/2019 (MoF Regulation
Tangerang, Bekasi/
81/2019) concerning the Limitations of Public Houses, Jabodetabek) and
Worker Camp, Student and Pupil Dormitories, and Other Sumatra (except Riau
Islands, Bangka Belitung,
Housing for which the Supply is Exempt from VAT.
and Mentawai Islands)
The considerations underlying the issuance of the 2 Kalimantan (except 153 million 164.5 million
regulation signed by the Minister of Finance of the Murung Raya Regency
Republic of Indonesia on 20 May 2019 and promulgated and Mahakam Ulu
Regency)
two days thereafter are the ability and the provision of
3
broader opportunities to low-income communities to Sulawesi, Bangka 146 million 156.5 million
Belitung, Mentawai
own houses.
Islands, and Riau Islands
(except Anambas
Modest Houses (Rumah Sederhana) and Very Islands)
Modest Houses (Rumah Sangat Sederhana) 4 Maluku, North Maluku, 158 million 168 million
Bali, and Nusa Tenggara,
In addition to price thresholds, there exist several other Jabodetabek, and
criteria that must be met. MoF Regulation 81/2019 Anambas Islands,
Murung Raya Regency,
states that the public houses entitled to VAT exemptions
and Mahakam Ulu
are modest houses and very modest houses as referred
Regency
to in the VAT Law.
5 Papua and West Papua 212 million 219million
Modest houses and very modest houses are houses that Source: Appendix of MoF Regulation 81/2019.
meet several criteria, namely:
The definition of the low-income group is stipulated
• the area of the building does not exceed 36 m2;
in the laws and regulations pertaining to housing and
• the selling price does not exceed the selling price
residential areas.
threshold, provided that the selling price threshold
is based on the combination of the zone and relevant
year (listed in Appendix of MoF Regulation 81/2019); Worker Camp and Student/Pupil Dormitories
• the first house owned by a low-income individual, The government also exempts the VAT imposition on
used personally as a residence, and not disposed of worker camp and student/pupil dormitories. Worker
within a period of four years from the acquisition; camp is a simple multi-story or single-story building unit,
• the size of the land is not less than 60 m2; and built and financed by an individual or an employee or a
• the acquisition is in cash or financed through a labor cooperative intended for permanent workers or
subsidized or non-subsidized credit facility or low-income informal sector workers with agreed rental
through sharia-based financing. fees not disposed of in 4 years after the acquisition.
In the regulation, the government groups the selling Furthermore, student/pupil dormitories are simple
price thresholds into five zones, fewer than the previous multi-story or single-story buildings, built and funded
9 zones. Several provinces have been merged into one by universities or schools, individuals, and/or local
zone, hence having the same thresholds. governments, which are specifically intended for

The selling price thresholds of houses in all of the students or university students’ accommodation, which
regions listed in table 1 have increased compared to the are not disposed of in 4 years after the acquisition.
previous year, as stipulated in MoF Regulation No.113/
PMK.03/2014. The 2020 selling price thresholds Other Housing
provisions shall apply for subsequent years provided that
In addition to modest houses and very modest houses,
there are no changes in the provisions in MoF Regulation
worker camp, and student/pupil dormitories, the
81/2019.
government also provides VAT exemptions for other