Page 2 - Newsletter (Tax Relaxation of Luxurious Housing, Control of Local Tax, and Restructuring of Tax Authority)

DDTC Newsletter Vol.01 | No.09 I June 2019 Page 2 of 7

Tax Relaxation of Luxurious Housing, Control of Local Tax, and
Restructuring of Tax Authority

Increased Thresholds for Housing These provisions are contained in the Minister of Finance
Selling Price Subject to 20% Sales Tax Regulation No. 92/PMK.03/2019 (MoF Regulation No.
92/2019) concerning the Second Amendment to the
on Luxury Goods MoF Regulation No.253/PMK.03/2008 (MoF Regulation
No. 253/2008) concerning Certain Corporate Taxpayers
The government of Indonesia has increased the
as Income Tax Withholders from Buyers on Sales which
thresholds of housing selling prices subject to 20% sales are Classified as Luxurious Goods.
tax on luxury goods/STLGs (Pajak Penjualan atas Barang
Mewah/PPnBM) as of 11 June 2019. This is stated in the The issuance of this regulation is intended to encourage
Republic of Indonesia Minister of Finance Regulation the growth of the property sector through the adjustments
Number 86/PMK.010/2019 (MoF Regulation No. of the basic provisions for the withholding, criteria,
86/2019) concerning the Amendments to the Minister nature, and amount of tax withholding on the purchase
of Finance Regulation Number 35/PMK.010/2017 (MoF of goods classified as very luxurious. This regulation also
Regulation No. 35/2017) concerning the Types of Taxable states that the income tax rate for very luxurious housing
Goods Classified as Luxurious Other Than Motor Vehicles is set at 1%, reduced from 5% in the previous regulation.
that are Subject to Sales Tax on Luxury Goods.
This regulation also set forths the selling price as the
The main reason underlying the amendment to this supply price paid by the seller to the buyer. Furthermore,
regulation is to encourage the growth of the property the income tax payable is estimated from the selling price
sector through increasing the competitiveness and which does not include Value Added Tax and Sales Tax on
investment in the property sector. In this latest regulation, Luxury Goods (VAT and STLGs). In addition, the payment
the government does not classify luxury housing type and of article 22 income tax can be taken into account as an
it is stated that the luxury housing group, such as luxury income tax credit in the current year for the buyer.
houses, apartments, condominiums, townhouses, and
There are two types of luxury housing subject to a 1%
the like with a selling price of 30 billion rupiah or more
article 22 income tax rate. First, the selling price or the
will be subject to 20% STLGs. Hence, if the selling price
transfer price of the house and its land reaches 30 billion
of luxury housing is less than that amount, the STLGs will
2.
rupiah or if the area itself reaches 400 m This selling
be exempted.
price as the threshold increases significantly compared
In addition to the threshold that has been increased to 30 to the previous regulation of IDR5 billion. There is no
billion rupiah, this latest regulation also classifies luxury change in terms of the building area itself.
housing into one group whereas the previous regulation
Second, the 1% rate is imposed on housing in the form
classified luxury housing subject to 20% STLGs into two
of apartments, condominiums, and the like with a selling
groups as follows:
price or transfer price valued at more than 30 billion
1. Selling price of houses and townhouses of non-strata

rupiah or the area of building and land is more than 150
title types with a threshold of 20 billion rupiah; and/
m2. The previous regulation stipulated the selling price
or
for this threshold of 5 billion rupiah with the same area.
2. Selling price of apartments, condominiums,
townhouses of strata title types, and the like with a In addition to regulating the reduction in rates on luxury
threshold of 10 billion rupiah. housing to 1%, this regulation stipulates the article 22
income tax rate of 5% which is to be withheld upon the
sale of other luxury goods. The 5% rate is imposed on the
The Reduction of Article 22 Income following very luxurious goods:
1. private airplanes and private helicopters;
Tax Rate for Luxury Property 2. cruise ships, yachts, and the like;
3. four-wheeled motor vehicles transporting fewer
In addition to raising the threshold for the selling prices than 10 people in the form of sedans, jeeps, sport
of very luxurious housing through MoF Regulation No. utility vehicles (SUVs), multi-purpose vehicles
86/2019 that stipulates the threshold for the imposition (MPVs), minibuses, and the like with a selling price
of STLGs, the government has again relaxed the policy of more than 2 billion rupiah or with a cylinder
related to taxation for the property sector. This new capacity of more than 3,000 cc; and/or
regulation, which has come into force as of 19 June 2019, 4. two and three-wheeled motor vehicles with a selling
officially reduces the rate of article 22 income tax (Pajak price of more than 300 million rupiah or with a
Penghasilan/PPh) on very luxurious housing from 5% to cylinder capacity of more than 250 cc.
1%.