Revitalizing Indonesia's Property Sector: Extended VAT Incentives for Homebuyers

By: Salsa Grandis Sains, a Directorate General of Taxes officer

After undergoing consecutive economic slowdowns due to the pandemic, the Indonesian property sector is now showing signs of recovery. The overall economic recovery post-pandemic has bolstered the purchasing power of the community and reignited interest in property acquisitions. This is evident in the high enthusiasm among the public purchasing homes during property exhibitions. Low Home Ownership Loan interest rates, the integration of technology in property marketing, and government tax policies, particularly through incentive provisions, contribute positively to the demand for properties.

The property sector makes a significant contribution to job absorption and the increase in the national gross domestic product (GDP). To sustain the growth momentum in the property sector in 2024, the government has implemented several strategic policies, including fiscal incentives to stimulate the property sector. As part of the national economic recovery program, the government is once again providing the Value Added Tax (VAT) incentive known as "Pajak Pertambahan Nilai Ditanggung Pemerintah" (Government-Borne Value Added Tax or PPN DTP) for home purchases in 2024. Therefore, through the extension of this incentive, an increase in property transaction activities is expected to positively impact other related economic activities.

Through the Minister of Finance Regulation Number 7 of 2024 concerning Value Added Tax on the Transfer of Land Houses and Housing Units Borne by the Government for the 2024 Fiscal Year (PMK 7/2024), the government officially extends the PPN DTP incentive for the transfer of land houses and housing units until end of 2024. PPN DTP is granted for the VAT due for the tax period from January to December 2024, with the incentive period divided into two:

1. For the transfer of houses from January 1 to June 30, 2024, PPN DTP is granted at 100% of the VAT due from the Tax Base up to IDR 2,000,000,000 with a maximum selling price of IDR 5,000,000,000.
2. For the transfer of houses from July 1 to December 31, 2024, PPN DTP is granted at 50% of the VAT due from the Tax Base up to IDR 2,000,000,000 with a maximum selling price of IDR 5,000,000,000.

However, not all home purchases can qualify for the PPN DTP incentive. According to regulation of PMK 7/2024, there are two conditions that must be met for the transfer of land houses and housing units to receive the PPN DTP incentive, the selling price is no more than IDR 5,000,000,000, and the land house or housing unit must be new and delivered in a ready-to-occupy condition.

The government-borne VAT/PPN DTP is the VAT on the transfer that occurs when the sale and purchase agreement is signed by the Land Deed Official (PPAT) or when the Binding Sale and Purchase Agreement (PPJB) is fully settled in front of a notary, and the actual transfer of the right to use or occupy the ready-to-use house, as evidenced by the Handover Protocol from January 1 to December 31, 2024.

Several points to note from PMK 7/2024 are these incentive:

• Can only be utilized once by Indonesian citizens or foreign citizens.
• Is only granted for the transfer of new land houses or housing units that have obtained the House Identity Code from the Ministry of PUPR application system.
• Can be used for transfers with installment schemes.
• Can be utilized even if the down payment or first installment has been made before the implementation of Regulation No. 120/PMK.010/2023, as long as it does not exceed September 1, 2023.
• Can be utilized, but the land house or housing unit cannot be transferred within 1 (one) year from the date of transfer.

For individuals who have previously utilized the Value Added Tax (VAT) Incentive DTP PMK 120/2023, they are no longer eligible to access the VAT Incentive DTP based on Regulation PMK 7/2024. However, there are certain conditions under which individuals still qualify to avail themselves of the VAT Incentive PMK 7/2024, even if they had previously received the VAT Incentive DTP under Regulation 120/2023. These conditions include Individuals who have utilized the VAT Incentive before the enactment of Regulation PMK 120/2023 and individuals who have received the VAT Incentive based on Regulation 120/2023 but still have outstanding VAT payments in the year 2024.

So, do not miss this opportunity! Take advantage of the VAT Incentive (PPN DTP) to support indonesian economic growth.

*) Artikel ini merupakan pendapat pribadi penulis dan bukan cerminan sikap instansi tempat penulis bekerja.

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