Indonesia Government has announced to extend the VAT exemption on a house sale. Based on the Regulation of the Minister of Finance Number 103/PMK.010/2021 (PMK-103/2021), the exemption is to be extended from March 2021 until December 2021. We have summarized several key points from this new rule below.
The Criterion for The House
There are two types of houses for which the incentive can be applied (1) a landed house, both functioned as a residence and an asset, including a landed house that is partly used as a shop or an office, and (2) a residential apartment unit. The house must be new and ready to use with a maximum selling price of IDR5 billion. It also has had to obtain a house identity code from the Government and has never been traded before.
The sale of the house must be carried out no later than 31 December 2021 with a Record of Transfer (BAST). The BAST has to be registered to the Government within a period no later than 7 months after the sale is made. The house is also prohibited to be sold within one year.
The Requirements for The Buyer
The VAT exemption is only given for the sale of one landed house or one apartment unit to one person. Indonesian citizen who has Indonesian Tax Identification Number (NPWP) or Single ID Number (NIK) is eligible to utilize the incentive. However, a foreigner is also qualified to get an incentive as long as he has NPWP and meets the requirements for the ownership of landed houses or apartment units for foreigners under prevailing laws.
The Requirements for The Seller
The seller who acted as a taxable entrepreneur under the VAT rule is required to make a specific tax invoice on the sale of the house and file the incentive realization report. However, the tax invoice reported in the periodic VAT return is treated as an incentive realization report under this rule.
The Amount of The VAT Exemption
The VAT on the sale of the house is born by the Government in a dual tariff system:
- 100% for a house with a maximum selling price of IDR2 billion; and
- 50% for a house with a selling price of more than IDR2 billion up to IDR5 billion.
Any sales of houses made before 30 July 2021 and fulfilled the requirements under the old VAT exemption rule (PMK-21/2021) are eligible to utilize the incentive under the new rule (PMK-103/2021), but the seller has to register the BAST no later than 31 August 2021. If the buyer has made a payment before 30 July 2021 but the house has not been ready yet, the incentive is given following the new rule. Any tax invoices made before 30 July 2021 do not need to be corrected or replaced.