Home Blog A Complete Guide to Property Tax in Indonesia Finance | Tax Reporting A Complete Guide to Property Tax in Indonesia InCorp Editorial Team 28 June 2024 4 minutes reading time Table of Contents Taxes Imposed During the Transfer of Land and Building Rights in Indonesia Other Taxes to Know Related to Property in Indonesia How InCorp can Assist Indonesia is a sought-after destination for business owners and investors to purchase or own a property. Thanks to its recent economic reform, Indonesia does not just depend on direct taxes for the country’s income. Therefore, expats buying properties in Indonesia are paying one of the lowest property tax Indonesia on their property acquisitions, compared to many Southeast Asian countries. The land and building tax or Pajak Bumi dan Bangunan (PBB) is a state tax and the most basic property tax in Indonesia. Individuals or entities who pay for the PBB have the right to the land in terms of land control, land ownership, etc. PBB is levied at 0.5% and it is a regional income for the local government and central government for their facilities provision. READ MORE:Essentials about Starting a Property Business in IndonesiaAn Overview of Property and Land Ownership in IndonesiaHow Can Foreigners Buy A House in Indonesia? Taxes Imposed During the Transfer of Land and Building Rights in Indonesia During the transfer of land and building rights in Indonesia, both buyers and sellers shall pay certain taxes. Sellers must pay for the income tax of the sale of land or property, and buyers need to pay for the acquisition tax of land and building rights. Income Tax (PPH) Payable by Sellers Sellers must pay for the income tax from the transfer of their land or building rights per the Indonesian Law GR 34/2016: 1% for simple flats or simple houses for their transfer of land or building rights 2.5% for regular buildings except for simple houses or simple flats for their transfer of land or building rights 0% for government’s buildings and government’s special-assignment building for their transfer of land or building rights Acquisition Tax (BPHTB) Payable by Buyers Acquisition duty is imposed on buyers for their acquisition of land or building rights. The rate is 5% and is determined based on the assessed value or transaction value. However, certain individuals or organisations are not subject to BPHTB. These acquisition tax-exempted individuals or organisations are stated below: The State for the administration of government or development implementation for public interest Diplomatic consulates or representatives in terms of reciprocal treatment Representatives of agencies of international organisations not undertaking any profit-generating activities READ MORE:6 Ways To Manage a Leased Property in BaliThe Ultimate Guide to Property Investment in Bali Other Taxes to Know Related to Property in Indonesia There are some other taxes related to property in Indonesia that you must be aware of. Speak with a tax professional to understand more about these additional taxes. Lease Tax Lease tax or rental income tax is also applicable for both tax residents and non-tax residents in Indonesia. For tax residents, the amount of lease tax is 10% of the property lease value; for non-tax residents, the lease tax is 20% of the property lease value. Construction Tax Construction tax in Indonesia is only applicable when the construction of the building is done. The construction tax value is calculated based on the building’s construction budget or Rancangan Anggaran Biaya in the Indonesian language. The construction tax rate is 2% or 20% of the most current value-added tax rate. How InCorp can Assist Legal consultants at InCorp are skilled tax lawyers and professionals who can offer you the best property tax advice on the most complex matters. Our team also consists of experienced and high-ranking business specialists with unique insight to help you deal with tax audits, debts, and disputes. Your property tax in Indonesia should not be overwhelming. Whether you are an investor, owner, or developer, InCorp is here to deliver custom-designed solutions to help you eliminate property tax complications, add value, and achieve your desired outcome. Get the right tax advice from InCorp. Complete the form below. Read Full Bio Verified by Dessy Amelia Senior Tax Manager at InCorp Indonesia Dessy has over eight years of experience in tax services, leading InCorp Indonesia's tax team in compliance and strategic solutions. She holds a bachelor's degree in Fiscal (Tax) Administration from Universitas Indonesia and is pursuing a master's degree in Tax Policy and Administration at the same university. She is also a certified tax consultant (USKP C), and a member of the Indonesian Tax Consultants Association (IKPI). Frequently Asked Questions Will having a tax ID but never submitting tax reports cause a problem for my company? Yes, you will receive an administrative penalty for delaying or not correctly and promptly filing the tax report. It is best to hire a local third party to handle your taxation matters in Indonesia, such as InCorp. Is there any foreign exchange control or limitation in Indonesia? Foreign currency transfers to and from Indonesia are not subject to exchange controls, allowing investors to freely move funds. However, these transactions must be reported to Bank Indonesia. Moreover, there are reporting obligations concerning offshore assets and liabilities to ensure transparency in financial activities. What taxes are involved? For employment, the company is subject to: Employee income tax article 21 VAT on both the service invoice and the salary invoice 2% recovery tax on salary invoice How is pricing determined for your finance, accounting, and tax services? To provide you with accurate pricing information for our finance, accounting, and tax services, we consider the complexities of your inquiries and the dynamic nature of regulations in Indonesia. As a result, the pricing for the services may vary accordingly. For pricing details, please talk to our experts. Get in touch with us. 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