Government 'Covers' IDR 7.9 Trillion For Car And Property Taxes

Car illustration. (Photo: By courtesy)

JAKARTA - The government, through the Ministry of Finance, said the implementation of tax incentives in the motor vehicle and property sector starting March 1 is estimated to have the potential to eliminate state revenues of up to IDR 7.9 trillion.

However, this tax exemption step was taken in order to provide a stimulus to the two sectors in order to contribute more to the national economy.

Minister of Finance Sri Mulyani, in the Press Statement on the Provision of Incentives for Motor Vehicles and Housing, which was held with several related ministers, revealed that these incentives have been included in the 2021 national economic recovery budget (PEN).

"This incentive is expected to be able to maintain the sustainability of strategic sector businesses which were quite depressed during the pandemic," he said in a virtual manner, Monday, March 1.

In detail, the total incentives borne by the government (DTP) of the two productive sectors are respectively targeting a sales tax on luxury goods (PPnBM) for cars of IDR 2.9 trillion and a value-added tax (VAT) exemption from the property industry of IDR 5 trillion.

Then, PPnBM and PPN incentives are included in the business world incentives, which are budgeted at IDR 58.46 trillion for this year.

Meanwhile, the 2021 PEN fund is known to be IDR 699.43 trillion, an increase of about 21 percent from the previous year's realization of IDR 579.7 trillion.

Meanwhile, the PPnBM DTP requirements for vehicles are provided for the sedan and 4x2 segments with engine capacities below 1,500 cc and produced domestically. This segment was chosen because domestic products control more than 91 percent of the Indonesian market and have a domestic content level (TKDN) of more than 80 percent.

Furthermore, the property industry VAT requires two main things. First, it must be a type of landed house or flat with a maximum selling value of IDR 2 billion and will be given a VAT exemption of up to 100 percent.

Second, landed houses or flats with a sale value of between IDR 2 billion to IDR 5 billion will be given a 50 percent VAT exemption.

Then, another thing that must be fulfilled is that each person can only buy one type of property within a period of one year, and cannot be resold within one year.