Tax Incentives for House Buyers: Up to IDR 5 Billion

Starting from November 1^st, 2023, the government of Indonesia applied tax incentives to the purchases of landed houses used as residences, shops, or offices as well as residential flats up to a price of IDR 5 billion. The Directorate General of Taxes provides the Government-Borne Value Added Tax up to a value of IDR 2 billion. Further explanation was discussed by Andi Ilham Muliawan Mahyuddin and Puja Aldila, tax officers from Foreign Investment One Tax Office, on Instagram live, Jakarta (Wednesday, 6^th/12).

As an illustration, a house worth IDR 2.5 billion cash purchased in December 2023 will get the tax facilities for the amount of IDR 2 billion maximum as the tax base. Then, the remaining value of IDR 500 million will be counted at normal rates tax base. Thus, the amount of incentive is Rp110 million. This number comes from 11% VAT rates to the 50% tax base rate of the sale value IDR 2 billion. Meanwhile, the remaining value of the transaction, Rp500 million will be applied to 11% VAT normal rates which is equal to Rp27.5 million and is charged to the buyer.

In the terms of providing the tax invoices, the seller will issue two types of tax invoices. The first invoice states the VAT value of Rp110 million and is issued with code 070 (taxable goods that receive facility; VAT borne by the Government). The second invoice states the VAT amount of IDR 27.5 million and is issued with code 010 (taxable goods with the VAT is collected by the seller). "All house purchases can claim the facility, as long as the price is below IDR5 billion," Andi added on the tax educational broadcast.

The government through Minister of Finance Regulation Number 120 of 2023 (PMK-120/2013) seeks to encourage the housing industry by providing tax incentives. This facility applies to house sale and purchase transactions from November 1^st, 2023, to December 31^st, 2024.

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