VAT Exemption for Low-Income Houses Renewed

The government has renewed the criteria for the exemption of Value Added Tax (VAT) on the transfer of public houses for low-income people, Pondok boro workers' houses, and student dormitories.

Previously, the provision regarding the VAT exemption was regulated in the Minister of Finance Regulation (PMK) Number 81/PMK.010/2019. The regulation is now revoked and considered invalid because it was replaced by a new regulation.

The definition of public houses includes houses for Indonesian citizens who are included in the low-income criteria.

Meanwhile, employee houses are buildings financed and built by companies for their employees. Thus, shareholders, directors, commissioners, and management are not entitled to receive this facility.

Then, Pondok boro houses are simple buildings built and financed by individuals, Labor Cooperatives, or Employee Cooperatives for non-permanent workers or low-income informal sector workers.

Public and Employee Houses

Regarding the transfer of public houses and employee houses, in the latest provision, namely the Minister of Finance Regulation (PMK) Number 60 of 2023, which took effect on 12 June 2023, there are several criteria that must be met in order to get a VAT exemption facility.

First, it has a minimum building area of ??21 m2 to 36 m2. The previous provision only stipulated the limit for the lowest building area, which was 21 m2, without specifying the maximum area.

Second, it has a land area between 60 m2 and 200 m2, whereas the previous regulation only mentioned a minimum land area of 60 m2 without mentioning the maximum area limit.

Limitation of the Selling Price

Third, the government also stipulates a limit on the selling price of public houses and workers who are entitled to VAT exemption facilities, based on the area and year of delivery of the house.
 

No	Area	2023	Starting in 2024
1	Java (Except Jabodetabek*) and Sumatra (Except Riau Islands, Bangka Belitung and Mentawai Islands)	IDR 162.000.000	IDR 166.000.000
2	Kalimantan (Except Murung raya Regency and Mahakam Ulu Regency)	IDR 177.000.000	IDR 182.000.000
3	Sulawesi, Bangka Belitung, Mentawai Islands and Riau Islands (Except Anambas Islands)	IDR 168.000.000	IDR 173.000.000
4	Maluku, North Maluku, Bali and Nusa Tenggara, Jabodetabek*, Anambas Islands, Manurung raya regency, Mahakam Ulu regency	IDR 181.000.000	IDR 185.000.000
5	Papua, West Papua, Central Papua, Papua Pegunungan, South Papua and Southwest Papua	IDR 234.000.000	IDR 240.000.000
*Jakarta, Bogor, Depok, Tangerang and Bekasi

The selling price limit includes the costs incurred. For example, buying and selling transaction fees and financing transaction costs requested by third parties, other than VAT-Registered Persons who hand over the house.

However, if the house is handed over free of charge from the company to the employee, it can refer to the tax base, as stipulated in the tax provisions governing other values.

The Limitation of Income

The amount of income of people who are entitled to receive the VAT exemption facility refers to the policy of the Ministry of Public Works and Housing (PUPR), regarding the criteria for low-income people.

The criteria are stipulated in the Minister of PUPR Decree Number 22/KPTS/M/2023 in the context of providing simple and very simple housing assistance. Based on this regulation, the income limit is set as follows:

 

Area	Maximum Monthly Income
	General Participants		Tapera Participants (1 person)
	Not Married	Married
Java, Sumatera, Kalimantan, Sulawesi, Bangka Belitung Islands, Riau Islands, Maluku, North Maluku, Bali, East Nusa Tenggara, West Nusa Tenggara	IDR 7.000.000	IDR 8.000.000	IDR 8.000.000
Papua and West Papua	IDR 7.500.000	IDR 10.000.000	IDR 10.000.000

Because the income limitation criteria are determined per month, to obtain VAT exemption for buying a house, the taxpayer must determine the average income value per month. Here are the conditions;

• The average monthly income is determined by combining all regular and irregular income in one year divided by 12 months from January 1 to December 31 of the previous year.
• If the income received in the previous year is not full for 12 months or has not had an income since January 1, the income can be annualized and then divided by 12 months.
• For taxpayers with employee status, income value refers to gross value
• For business actors or self-employed individuals, the value of income refers to the net value using the calculation norm.
• If the business actors or self-employed individuals use bookkeeping, the value refers to the net.
• For individuals whose tax calculation is final, the basis for obtaining this VAT facility refers to the net value with the calculation of the norm.
• For employees who also do freelance work, it refers to the accumulated gross value of all their income
• Husband and wife carrying out separate or combined tax obligations refers to a combined income

Self-Use and Non-Transferable

The house that gets the VAT exemption facility must also be used as a residence. In addition, the house may not be transferred for four years since it was owned.

If these conditions are not met, the VAT that was originally exempted becomes payable and must be paid by the taxpayer who purchased the house.

The VAT payable must be paid within a maximum of one month from the time it becomes payable, which is when the house is known to be used not for personal use or transferred. Please note that the VAT payable cannot be credited.

Required to Submit Tax Return

In addition to meeting some of the criteria mentioned, taxpayers who want to get a VAT exemption facility for public houses and workers must also meet other requirements, namely:

• Has submitted annual income tax returns for the last two tax years.
• Has submitted VAT returns for the last three tax periods, and
• Does not have any tax debt.

Submitting a Notification

This VAT exemption facility can be carried out by submitting a notification to the Directorate General of Taxes (DGT). The report is submitted by the community, or employees who receive houses through the channels provided.

For VAT facilities for Pondok boro, notifications are submitted by labor cooperatives, employee cooperatives, local governments, or central governments. Meanwhile, regarding VAT facilities for dormitories, notifications are submitted by universities, schools, local governments, or the central government.

The notification report must be accompanied by a stamped statement regarding the amount of average income in one month.

For taxpayers with employee status, a certificate is issued by the employer, while for those with status as business actors or self-employed individuals is made by the recipient of the house.

Meanwhile, if the status is as an employee and also a freelance business actor, a certificate is made by the recipient of the house and also the employer.

Home Ownership Program

This facility can also be used by people who receive housing assistance through the government's public housing ownership program. The requirement is to have a number that passes the government's public homeownership program payment test, as proof of having been registered as a recipient of the government's public homeownership program.

Obligation to Make Invoices

Meanwhile, taxable entrepreneurs who hand over public houses, Pondok boro, and student dormitories as well as workers' houses, are obliged to make tax invoices according to the provisions of the laws and regulations in the field of taxation.

The tax invoice must contain information such as the identity of the party receiving the house, such as name, tax identification number, or single identification number. As well as including the billing test passing number, if the VAT facility is related to the government's general housing ownership program.

Meanwhile, specifically for VAT facilities for the transfer of public houses, workers' houses, Pondok boro, and dormitories, the DGT must include the receipt number for the notification of the use of the facility.

Then, in the item name column, fill in the identity of the house submitted and in the invoice reference column, fill in the description "Government housing ownership program". In addition, the tax invoice must also be filled with information such as "VAT Exempted Based on Government Regulation Number 49 of 2022". (ASP/KEN)