JAKARTA (TheInsiderStories) – Indonesian government considers to remove the tax on the purchase of luxury homes to encourage the growth of the property business. Currently, the purchase of luxury homes is taxed in the form of Article 22 Income Tax (PPh) and Sales Tax on Luxury Goods (PPnBM).
“So, there is something else we want to consider so we can eliminate it,” said Head of the Fiscal Policy Office of the Ministry of Finance, Suahasil Nazara, at the Ministry of Finance office, on Thursday (18/10).
He explained, the plan to provide incentives was intended to make the purchase price of luxury homes cheaper. To that end, the government is reviewing the revision of Minister of Finance Regulation Number 90 Year 2015 concerning Certain Corporate Taxpayers as Income Tax Collectors from Buyers on Sales of Very Luxurious Items and PMK Number 35 of 2017 concerning Types of Luxury Taxable Goods Other Than Motorized Vehicles Subject to Sales Tax on Luxury Goods.
In the provisions of decree released in 2015, the tax object is the sale of a house with a selling price of more than Rp5 billion (US$344,828) or a building area of more than 400 square meters and an apartment with a selling price of more than Rp5 billion or a building area of more than 150 square meters.
Meanwhile, in PMK 35/2017 there is a house and town house of the non-strata title type with a selling price of Rp20 billion or more and strata title type apartments, condominiums, town houses with a minimum selling price of Rp10 billion subject to 20 percent of luxury tax.
Nazara said that the plan had been discussed with property developers. He said, goods that are very luxurious actually are naturally subject to high taxes. However, for the property sector, there are considerations to maintain industrial growth and the impact of the multiplier or multiplier effect.
He continued, luxury home sales are not large in quantity. However, profits generated in one transaction can be higher than lower or middle-class home sales.
“Once a sales transaction is made, then the value is huge but rarely the transaction. But, it can help the company,” said Nazara.
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