Income Tax Payments on Income From the Transfer of Land and Building Titles

This is the third series of amendments to Government Regulation No. 48 of 1994 and is designed to simplify and facilitate the calculation of income tax payable on the transfer of land and building title. Furthermore, the Regulation is expected to provide support to the procurement program for simple housing and apartments.

The Regulation, No. 71 of 2008, amends Articles 4, 5, 6, and 8.

Article 4(1) is amended and there are two additional paragraphs added; (5) and (6). Paragraph (1) states that the income tax is 5% on the gross income from the transfer except where the title is over simple housing or apartments where the tax is 1% on the gross. Paragraphs (5) and (6) state that simple housing and simple apartments may be granted value added tax exemptions as a facility pursuant to prevailing laws and regulations.

Article 5 lists the income that is exempted from income tax. This includes land and buildings that are inherited. Those earning an income that is not subject to income tax may transfer title in land or buildings up to IDR 60 million without incurring any income tax liability.

Article 6 has been repealed.

Article 8(1) has been amended and states that any transaction where income tax is levied is considered to be final in nature. Paragraph (2) has been repealed.

The Regulation was issued on 4 November 2008 and comes into force as of 1 January 2009.