When buying property in Indonesia, you must understand the purchase property tax Indonesia. It’s no secret that property tax laws in Indonesia change regularly and can be complex to understand, especially for foreigners. Understanding the Indonesian property tax rules can help you further with your plan to buy property or land in Indonesia.
Purchase property tax Indonesia: Which taxes does the buyer pay?
When you buy property in Indonesia, you will face the following purchase property taxes in Indonesia:
- Transfer Tax (BPHTB)
- Land and Building Tax (PBB)
- Value Added Tax (VAT)
- Documentary Stamp Tax (DST)
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1. Transfer Tax (BPHTB)
In Indonesia, the buyer of property or land must pay a Transfer Tax. This tax is also known as the land acquisition tax or Bea Pengalihan Hak atas Tanah dan Bangunan (BPHTB). The amount of the tax is calculated at a flat rate of 5% based on the Tax Object Acquisition Value, called Nilai Perolehan Objek Pajak (NPOP), minus the non-taxable real estate objects, called Nilai Perolehan Objek Pajak Tidak Kena Pajak (NPOPTKP). The BPHTB tax is paid once during the real estate transaction. The notary won’t sign the deed of transferring rights until the Transfer Tax has been paid.
The Transfer Tax is a purchase property tax in Indonesia, and you can calculate the BPHTB tax with the following formula:
BPHTB = 5% x (NPOP – NPOPTKP)
Calculate BPHTB tax
2. Land and Building Tax (PBB)
The property tax system in Indonesia includes the Land and Building Tax, also known as Pajak Bumi dan Bangunan (PBB) in Indonesian, which is paid to the Directorate General of Taxes (Direktorat Jenderal Pajak, Kementerian Keuangan Republik Indonesia). All owners of Indonesian property are required to pay this purchase property tax in Indonesia, which is based on the property’s valuations and is paid annually by the individual or entity with the right to control and own the land.
Before, the PBB rate varied between 0.01% and 0.3%. The Indonesian government has increased the PBB rate in 2022 to 0.5%. To calculate the PBB tax, you need the NJOP and NJKP:
- NJOP (Nilai Jual Objek Pajak) is the average price obtained during the real estate transaction. If there has not been a real estate transaction recently, the NJOP is determined by the local government by comparing the property with seminar objects.
- NJKP (Nilai Jual Kena Pajak) is the appraisal value calculated based on the NJOP.
You can calculate the NJKP with the following formula:
NJKP = 40% or 20% x (NJOP – NJOPTKP)
- 40% for properties above IDR 1 billion ($65,000)
- 20% for properties under IDR 1 billion ($65,000)
- NJOPTKP is IDR 12 million ($780)
After calculating the NJKP, the PBB tax can be calculated with the following formula:
PBB = 0.5% x NJKP
For example, we take a property with an NJOP value of IDR 5.8 billion ($377,000).
- NJKP = 40% x (IDR 5,800,000,000 – IDR 12,000,000) = IDR 2.32 billion ($150,488)
- PBB = 0.5% x IDR 2,315,200,000 = IDR 11.58 million ($752)
According to this calculation, the property owner has to pay IDR 11.58 million ($752) every year for PBB tax.
The Indonesian tax authorities send taxpayers a tax-due notice letter (Surat Pemberitahuan Pajak Terutang/SPPT) with the tax amount to be paid. The PBB tax must be paid within six months after the SPPT issue.
PBB tax calculator
Calculate the PBB tax for your property with our calculator:
3. Value Added Tax (VAT)
The Value Added Tax (VAT) is paid when buying or leasing property or land from a commercial company, like a constructor or developer. The VAT is considered an important purchase property tax in Indonesia. VAT is locally called Pajak Pertambahan Nilai (PPN) and is not subjected to transactions with secondary properties that have already been used. Currently, Indonesia’s VAT rate is set at 11%.
4. Documentary Stamp Tax (DST)
Also known as stamp duty, these pertain to taxes on certain legal documents, including transfer of property ownership. Payment of Documentary Stamp Tax is vital as it serves as legal evidence. The payment of stamp duty is dependent on the agreement of the parties.
The standard stamp duty costs IDR 10,000 ($0.65) and is paid when legalizing the paper.
Do you want to know more about property taxes in Indonesia?
This article is part of our series on Indonesian property taxes, explicitly discussing purchase property tax in Indonesia. Read more about property taxes in Indonesia:
- Complete tax guide
- Taxes on property rental income in Indonesia
- Taxes on selling property in Indonesia
- PT PMA and corporate taxes in Indonesia
Handle property taxes in Indonesia with Own Property Abroad
Are you considering buying property in Indonesia? Let Own Property Abroad be your guide to a smooth and stress-free journey in the property world. Our deep understanding and hands-on experience in the Indonesian market equip us to support you with legalities, such as the purchase property tax in Indonesia, property discovery, and property management.
Our team can assist you in understanding which property taxes to pay, prepare tax reports, file tax returns, and ensure timely payment of all property taxes. If you want more information on how we can help you with these services, please leave your contact details below or contact us at email@example.com.
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Frequently Asked Questions (FAQs)
Can a foreigner buy property in Indonesia?
Is there a purchase property tax in Indonesia for buyers?
There is a purchase property tax in Indonesia for property buyers named Transfer Tax. This tax is also called Land and Building Transfer Duty or Bea Pengalihan Hak atas Tanah dan Bangunan (BPHTB) and is calculated at a flat rate of 5%.
How much is the tax on land leases in Indonesia?
Land lease by non-resident individuals in Indonesia is subject to a final Withholding Tax of 20% of the gross rental income, or 10% when a DTA is in place.
How much is the purchase property tax in Indonesia?
The purchase property tax in Indonesia is known as Pajak Bumi dan Bangunan (PBB). The PBB depends on the property’s assessed value and is taxed at a flat rate of 0.5%.
Are there property taxes on rental income in Indonesia?
Are you planning to generate income by renting your property? You should be aware of the tax on rental income, which also counts for foreigners renting out property in Indonesia. You can find more about this tax in our rental income tax guide.