Regulation Update
VAT Incentives for Houses and Apartments Extended to The End of The Year

Tuesday, 10 August 2021

VAT Incentives for Houses and Apartments Extended to The End of The Year

The provision of Value Added Tax (VAT) facilities or incentives for the purchase of new landed houses and apartments has been extended to 31 December 2021 from the previous one which is only valid until 31 August 2021.

As is known, that the government provides facilities in the form of VAT borne by the government up to 100% on the purchase of property in the form of a new landed house or apartment.

This facility is provided with the condition that if the property value is at a maximum of IDR  2 billion, then 100% of the VAT will be borne. However, if the property value is above IDR 2 billion, the VAT that will be borne is only 50% of the VAT payable.

This is confirmed in the Minister of Finance Regulation (PMK) Number 103/PMK.010/210, which was stipulated on 31 July 2021. This provision also revokes the previous regulation, PMK Number 21/PMK.010/21.

Expatriates May Use the Facility

In the latest regulation, the government also confirmed that this facility can not only be enjoyed by Indonesian citizens (WNI) but can also be used by foreign nationals (WNA) who have a Taxpayer Identification Number (NPWP).

In addition to having a Tax ID number, the provision of the facilities will also consider other rules regarding the ownership of houses or apartments for foreign nationals.

Apart from extending the usage deadline, the latest regulation also reinforces several other things, related to the procedures and requirements for obtaining the facility.

First, in the latest provisions, the government emphasizes the definition of landed houses and apartment units that are the object of the facility.

The definition of a landed house is a building in the form of a house that is used as a place to live or become an asset for the owner.  This includes residences which are partly used as shops or offices. While the definition of an apartment is an apartment unit that functions as a place to live.

Second, the requirement that the landed house or apartment receive a government-borne VAT facility is that it must be handed over no later than 31 December 2021 or during the tax period in December 2021.

Third, the house being transferred has received the identity code of the house or apartment contained in the application provided by the Ministry of Public Works and Public Housing (PUPR).

Fourth, houses and apartments that receive facilities are new properties and are first handed over by the developer or in other words have never been transferred.

Fifth, this facility is given to one person for the purchase of a house or an apartment unit.  

Sixth, VAT-registered persons who sell apartments or permanent houses are required to make a tax invoice and report on the realization of government-borne VAT.

In the case of VAT borne by the government of 100%, then in the tax invoice issued is only one, with the description of transaction code 07. Meanwhile, if the VAT borne by the government is only 50%, then two tax invoices should be issued.

The first tax invoice is made for transactions with a 50% share of the selling price that the VAT is not borne by the government and a transaction code of 01% is added. The second tax invoice, for transactions with the 50% share of which the VAT is borne by the government, includes transaction code 07.

Revocation of The Facility

The Directorate General of Taxes (DGT) can revoke the provision of facilities if the sales-purchase houses or apartments does not meet the requirements of government-borne VAT incentive.

The following, some conditions that can cause the provision of facilities to be revoked:

  1. The object that is handed over or sold is not a landed house or an apartment that meets the criteria
  2. Taxpayers receive or buy a house or apartment more than one unit
  3. The buyer is not an individual taxpayer
  4. The house or apartment is submitted past the deadline for facility provision, which is the tax period December 2021
  5. The sale of a house or apartment is not accompanied by a tax invoice made in accordance with the provisions of facilities.
  6. The minutes of transfer of the house or apartment are not registered in the application of the Ministry of Public Works and Public Housing.

Therefore, upon the revocation of the facility, the DGT will collect the VAT payable according to the applicable regulations.



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