Property 101: Indonesian government set to continue cutting property taxes

Property 101: Indonesian government set to continue cutting property taxes
Staff ReporterDecember 7, 2020

The Indonesian government plan to cut the property transfer fee (BPHTB) to 1 percent.

It is to be in its economic stimulus package which will slash tax on real estate investment trustees (REITs) to almost zero. 

The government included REITs in its fifth economic policy package in October 2015, Coordinating Economics Minister Darmin Nasution said, adding that it removed double-taxation schemes within REITs in hope of attracting new investors.

“The Finance Minister cut the REITs tax to 0.5 percent. Then the government asked local administrations to lower BPTHB to 1 percent," Darmin said on Monday after a cabinet meeting. 

However the local press reported that regional authorities are reluctant to introduce the new policy, claiming that the fee is a source of revenue.

In Banten province, BPHTB is the second largest source of income after property tax (PBB). BPHTB contributes to almost 30 percent of its total regional revenue, data shows.

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