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Indonesia: Withholding tax, sales tax changes, “luxury residential” transactions

Indonesia: “Luxury residential” transactions

The Minister of Finance issued guidance regarding changes to the withholding tax and sales tax that are imposed on “luxury residential” transactions.

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Regulation No. 92/PMK.03/2019 (19 June 2019) reflects a reduced rate of withholding tax with respect to luxury residential purchase transactions with the rate being reduced from 5% to 1% of the sale price. There is also an increase to the exemption threshold—that is, an exemption from the withholding tax for transactions with a purchase price of IDR 30 billion* (increased from the prior threshold of IDR 5 billion). For transactions having a purchase price of IDR 30 billion or more, the 1% tax rate is applied to the entire purchase price.
 

*IDR 30 billion = approximately U.S. $2.1 million (as of 1 August 2019)

The taxable property size, however, remains the same. Thus, the tax (now at 1%) must be withheld if the size of the residence (building only) is more than 400 m2 or the size of the apartment/ condominium is more than 150 m2, regardless of the purchase price.

The withholding tax rate on all other “ultra-luxury goods” remains at 5%.

In addition, a related regulation was issued regarding the 20% sales tax on ultra-luxury properties. The new measure reflects that the sales tax applies only with respect to transactions involving transfers of residences, apartments and condominiums having a purchase price of IDR 30 billion or more. Previously, the sales tax was applicable to houses and townhouses having “non-strata title” with purchase prices of IDR 20 billion or more, and to apartments, condominiums, or townhouses with strata title and a purchase price of IDR 10 billion or more.


Read an August 2019 report [PDF 527 KB] prepared by the KPMG member firm in Indonesia

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