Purchase Of A Maximum House Of IDR 5 Billion For Free VAT Taxes Officially Applicable

A number of luxury residences have been completed at the Holland Village Housing Complex, Manado, North Sulawesi. (Photo: Doc. ANTARA)

The government has officially stipulated a Value Added Tax (VAT) borne by the Government (DTP) incentive for the delivery of landed houses and flats with a maximum selling price of IDR 5 billion.

This provision is regulated in the Minister of Finance Regulation Number 120 of 2023 which will take effect on November 21, 2023.

Director of Counseling, Services and Public Relations Dwi Astuti of the Directorate General of Taxes at the Ministry of Finance explained that the purpose of implementing this policy is to encourage national economic growth in the dynamics of the global economy through increasing property purchasing power by the community.

The property industry is one of the industries that has a large multiplier effect. The government hopes that through this incentive there will be an increase in property industry activities which will have a positive impact on other related economic activities," said Dwi in his official statement Wednesday, November 29.

Dwi explained that the DTP VAT was given on the basis of the Imposition of Taxes (DPP) for a maximum of IDR 2 billion, which is part of the maximum selling price of IDR 5 billion.

For example, Mr. A bought a house for Rp. 6 billion. For this transaction, Mr. A cannot take advantage of the DTP VAT incentive because the selling price of the house exceeds 5 billion rupiah. For the second example, Mr. B bought a house for Rp. 5 billion. For this transaction, Mr. B will get a DTP VAT incentive but only for DPP of Rp. 2 billion. In other words, VAT which is DTP of 11 percent multiplied by Rp. 2 billion or Rp. 220 million," he explained.

Based on Article 7 PMK, the DTP VAT provided is divided into two terms.

For the delivery of houses for the period 1 November 2023 to 30 June 2024, VAT borne by the government is 100 percent of the Tax Imposition Basis (DPP).

Meanwhile, the submission of the period 1 July 2024 to 31 December 2024, VAT borne by the government was 50 percent of the DPP.

Furthermore, this policy can only be utilized once by one Population Identification Number (NIK) or one Taxpayer Identification Number (NPWP).

In addition, this incentive is only given for the delivery of new landed houses or new flat units that have received a home identity code from the Ministry of Public Works and Public Housing application and/or the People's Housing Savings Management Agency.

Dwi also said that this policy could still be used for submission with an installment scheme. Even incentives can still be utilized even though the first down payment or installments has been made before the implementation of this PMK as long as it is not longer than on September 1, 2023.

"For example, Mr. C bought a house for 2 billion rupiah with a gradual cash method of four times Rp. 500 million each starting from September 2023 to December 2023 at the same time as the delivery of the house. For this transaction, Mr. C still gets 100 percent VAT incentives but only VAT is paid for in November and December payments," he explained.

One other requirement that needs to be considered is that the landed house or apartment unit must not be moved within one year of submission.

"The government hopes that the public can take advantage of this opportunity to own a house as well as support the national economy of the property sector and its supporting sectors," concluded Dwi.

The full provisions regarding this can be seen in a copy of the Minister of Finance Regulation Number 120 of 2023 concerning Value Added Tax on the Submission of Tapak Houses and Flats Borne by the Government for Fiscal Year 2023 which can be downloaded on the take-off page www.pajak.go.id.