In an effort to boost economic growth across Indonesia by stimulating public purchasing power within the housing sector, the government is offering a range of tax incentives relating to VAT on transfers of landed houses (rumah tapak) and units in apartment buildings (rumah susun) (collectively referred to as Properties) until December 2024. In order to officially implement this new tax incentive, the minister of finance has issued Regulation No. 61 of 2024 on Additional VAT Incentives for Transfers of Property Borne by the Government for the 2024 Fiscal Year (MoFR 61).
In essence, MoFR 61 stipulates that the scheme under which VAT is borne by the government (Pajak Pertambahan Nilai yang Ditanggung Pemerintah, or PPN DTP) will be granted for landed houses (i.e., residential buildings or terraced houses, including residential buildings that are partially used as shops or offices) and apartment units (specifically, functioning residential units). This article summarises the new provisions that have been introduced under MoFR 61 in terms of the following matters.
General requirements
MoFR 61 clarifies that the PPN DTP incentive applies to Property transfers at the time of signing of sale and purchase deeds prepared by land deed officials or fully paid sale and purchase agreements that are signed before notaries, and all such transfers must be completed between September 1 and December 31 2024. The transfers must also be followed by actual handovers of the relevant rights to the Properties, as documented during this period in official handover reports.
Properties must also meet the following criteria to be classified as eligible to take advantage of the PPN DTP facility:
They must have a maximum selling price of IDR5 billion; and
They must be new and ready to be occupied (i.e., as identified by a house identification code and as transferred by the seller for the first time without any prior transfers).
In the case of downpayments, the relevant downpayment or the first instalment must be paid by September 1 2024 and must fulfil the requirements for the securing of the PPN DTP facility between September 1 2024 and December 31 2024.
Eligible PPN DTP receivers
The PPN DTP facility may only be utilised by individuals (Receivers) for the acquisition of one type of Property. Receivers must meet one of the following criteria:
They must be an Indonesian citizen who has secured a tax identification number (nomor pokok wajib pajak, or NPWP) or a single identity number (nomor induk kependudukan); or
They must be a foreign citizen who has secured an NPWP, provided that they meet the legal requirements for Property ownership by foreign citizens, as applicable under law.
PPN DTP exemptions
The VAT will not be covered by the government in several circumstances, including the following:
The object transferred does not meet the criteria for Properties, as defined under MoFR 61;
Downpayments or first instalment payments were completed before September 1 2024;
The Property transfers occurred before September 1 2024 or after December 31 2024;
The transaction in question involves more than one type of Property being acquired by a single individual; and
A Property is transferred within a year of its initial transfer.
MoFR 61 clarifies that the PPN DTP granted will amount to 100% of the VAT owed on a taxable base of up to IDR2 billion, with a maximum sale price of IDR5 billion. This PPN DTP will apply during the September to December 2024 tax period and will cover VAT owed between September 1 and September 30 2024.
Any individuals who utilised the PPN DTP incentive during the previous period may still benefit from this facility for purchases of other Properties.
Furthermore, the relevant sellers must issue tax invoices in accordance with applicable law and submit a PPN DTP realisation report on the date that a given Property is transferred. Any failure to comply with these obligations will result in the imposition of administrative sanctions in accordance with the applicable laws and regulations on taxes. It should also be noted that reports and corrections of VAT notifications for the September to December 2024 period can be used as realisation reports.
The regulation became effective on September 11 2024.
The Core Tax Administration System
The Core Administration Tax System (Pembaruan Sistem Inti Administrasi Perpajakan) will facilitate compliance by taxpayers and be supervised by the Directorate General of Taxes (DGT). The launching of the Core Tax Administration System was first outlined in Minister of Finance Decree No. 483/KMK.03/2020. The digitalisation enhancement will increase the automation of all tax administration services, allowing taxpayers to see a 360-degree review of all their tax information. The benefits of enhancing services through the implementation of the Core Tax Administration System include:
Increased efficiency – more effective and efficient DGT business processes, creating a strong and accountable institution;
Enhanced data accuracy – increased synergy between agencies;
Economic growth – potentially increasing state revenue and the tax ratio, enabling increased public spending on infrastructure and services, which supports economic growth;
Better monitoring and enforcement – assisting in the segmentation and profiling of taxpayers; and
Cost savings – facilitating the analysis of taxpayer compliance in managing their tax obligations.
Some features of the Core Tax Administration System service compared with the previous system are summarised as follows.
Type of tax/action | Prior system | Core Tax Administration System |
Corporate income tax | Reporting using an e-form downloaded from the DGT’s online system | Filing and reporting is performed directly in the Core Tax Administration System |
VAT | Creating output and input VAT invoices via the e-Faktur system and reporting VAT returns via the web-based e-Faktur system | Filing and reporting is performed directly in the Core Tax Administration System |
Withholding tax | Preparation of tax slips and withholding tax returns online through the DGT website | Filing and reporting are performed by directly entering the information into the Core Tax Administration System |
Tax collection | Notified in a formal letter and sent to the registered address | Notified through the menu in the Core Tax Administration System |
SP2DKs (requests for an explanation of data or information) | Notified in a formal letter, sent to the registered address, and the response to the SP2DK is directly delivered | Notified in the Core Tax Administration System, and the response to the SP2DK is submitted through that system |
Tax audits | In special cases, taxpayers disclose inaccuracies by submitting a written explanation to the tax office | In special cases, inaccuracies are disclosed through the Core Tax Administration System |
Tax deposits | None | There is an option to deposit a balance for tax payment purposes |
ID billing | Manual creating via the DGT website | Created automatically when a tax return has been drafted; however, there is also an option for manual creation |
Account accessibility | DGT Online, web-based e-Faktur, and e-Faktur can be accessed with one registered account each, except for the e-Bupot for Article 21 income tax | There is only one account that can access the Core Tax System; however, there is an option to create access accounts for employees and attorneys |
Taxpayer’s power of attorney | The power of attorney is only attached when submitting the tax return | It is necessary to register the power attorney to be inputted into the Core Tax Administration System account |
Other tax administration: Registration of an NPWP; Confirmation of a taxable entrepreneur (PKP); Deletion of an NPWP; and Revocation of a PKP | Registration and application through the e-reg website or submitted directly to the tax office | Registration and application via the Core Tax Administration System |
