Government-borne VAT Regulation on Landed House Released, Here are the Provisions

The government has released regulation regarding the provision of Value Added Tax (VAT) facilities borne by the government (DTP) for the transfer of landed houses and flats with a maximum selling value of IDR 5 billion and a maximum tax base (DPP) of IDR 2 billion.  

The provision is contained in Minister of Finance Regulation (PMK) Number 120 Tahu 2023 which was issued and came into force on 21 November 2023. Through this regulation, the government will bear 100% and 50% of the VAT payable on the transfer of houses with certain criteria.  

The government-borne VAT of 100% is given for houses transferred in the period 1 November 2023 to 30 June 2024. Meanwhile, government-borne VAT of 50% is given for the transfer of houses made in the period 1 July 2024 to 31 December 2024. 

Read: VAT Exemption for Low-Income Houses Renewed

First-hand New House 

This facility only applies to newly landed houses or flats ready for occupancy that are handed over by VAT-Registered Persons (PKP) to individual taxpayers as the first hand. This means that the facility does not apply if the status of the house is a transfer or handed over to the second person and so on. 

Meanwhile, the criteria for individual taxpayers who are entitled to the facility are that they must get a house, an Indonesian citizen who has a Taxpayer Identification Number (NPWP) or Single Identity Number (NIK). 

However, foreign nationals can also obtain this facility as long as they have a Tax ID Number and fulfill the provisions governing the ownership of landed houses or flats. 

For the record, each taxpayer can only utilize the facility for one house. 

Period of VAT Payable 

The VAT that will be borne by the government is that arising from the transaction of handing over the house at the time of signing the Sale and Purchase Deed or signing the Sale-Purchase Commitment Agreement in Cash before a notary. 

Furthermore, the signing is followed up with a real transfer of rights, to use or control the ready-to-occupy home.  

The transfer of rights is evidenced by the record of transfer made from 1 November 2023 to 31 December 2024 and contains: 

• Name and Tax ID Number of VAT-Registered Retailer 
• Name and Tax ID Number or Single Identity Number of the buyer 
• Date of handover 
• The identity code of the house being handed over 
• A stamped statement that the handover of the building has been carried out. 
• Record of Transfer Number 
• House Identity Code Issued 

In addition, houses that get government-borne VAT facilities must also have a house identity code issued by the Ministry of Public Works and Housing (PUPR) or the Public Housing Savings Management Agency (BP Tapera). 

Down Payment Before 1 November 

In this regulation, the government provides concessions for house purchases where the down payment or installments have been made before November 1, 2023.

This concession only applies if the down payment or installments are made as early as 1 September 2023. In addition, the amount of VAT borne by the government only applies to payments made from 1 November 2023.

This means that the government will not cover the VAT for installments or advances paid before 1 November. 
 
VAT-Registered Persons Required to Make Invoice and Realization Report 

For VAT-Registered Persons conducting house transfers, it is obliged to issue tax invoices and reports on the realization of VAT borne by the government.  

The tax invoice must be made according to the applicable statutory provisions, for example, it must be filled in correctly and completely, including the buyer's identity including name and Tax ID Number or Single Identity Number.  In addition, tax invoices must also include a home identity code in the item name column.  

Two types of tax invoices may be issued by VAT-Registered Persons. First, tax invoices with code 01 for the portion of VAT that is not borne by the government. Meanwhile, the government-borne VAT portion uses invoice code 07. 

Then, the invoice made must be added with the statement "VAT Covered by the Government Execution of PMK Number 120 of 2023" and submitted in the VAT Return Period starting from the November 2023 tax period to the December 2024 tax period.  

Applicable to Previous Recipients of VAT-Borne Facilities 

The good news is that the government also allows taxpayers who have received government-borne VAT facilities before, to get the facilities regulated in this regulation. As long as they meet the specified criteria. 

As we know, the government-borne VAT facility for home purchases is not new. A similar policy was issued by the government during the Corona Virus Disease (Covid-19) pandemic. (ASP/KEN)