Property Taxes in Indonesia

Find out about the different property taxes for residents of Indonesia...

Land and Building Tax

Property is assessed in two ways: first the land is valued, then any development that is present on that land is valued. Property taxes are therefore calculated on both the land's worth and any buildings that might occupy it. Property tax in Indonesia is thus defined as Land and Building Tax or Pajak Bumi dan Bangunan.

Land and Building Tax is paid annually and is administered by the local offices of the Directorate General of Taxes (Direktorat Jenderal Pajak, Kementerian Keuangan Republik Indonesia).

Rates vary by region, but are generally between 0.1 percent to 0.2 percent of the property's value. Tax re-assessments take place every three years, except in fast-growing areas where re-assessment takes place every year.

Residences valued in excess of one billion rupiah are taxed at the top of the tax scale (0.2 percent). On the other end of the scale, properties valued at less than eight million rupiah are exempt from any tax as are properties used for the public benefit (social, educational, and religious purposes).

Land and Building Transfer Tax

When a piece of land changes hands, both buyer and seller must pay a five percent transfer tax which is based on the sale price or government assessed value, whichever is the higher.

VAT

VAT is not applicable to property transfers, but is for residential and commercial leases:

  • Residential leases - ten percent
  • Commercial leases - six percent

VAT is also imposed as a ten percent one-time tax on development projects.

Luxury tax

This ten percent tax is charged to buyers of luxury houses, residences, condominiums, and townhouses.

Foreigners and property taxes

Foreigners cannot buy property in Indonesia, but can lease it for up to 25 years. Though some terms are negotiable, the lessee usually pays for property taxes as the lessee benefits from the use of the land directly through its development. Legally, there should be no two-track system where property value and property tax assessments differ for citizens and foreigners.

Further Information