In an effort to boost economic growth across Indonesia by stimulating public purchasing power within the housing sector, the Government has decided to offer a range of tax incentives for Value-Added Tax (“VAT”) on transfers of landed houses (rumah tapak) and units in apartment buildings (rumah susun) (collectively referred to as “Properties”) until December 2024. In order to officially implement this new tax incentive, the Minister of Finance has issued Regulation No. 61 of 2024 on Additional VAT Incentives for Transfers of Property Borne by the Government (Pajak Pertambahan Nilai yang Ditanggung Pemerintah – “PPN DTP”) for the 2024 Fiscal Year (“MoFR 61”).

In essence, MoFR 61 stipulates that PPN DTP will be granted for landed houses (i.e. residential buildings or rowhouses, including residential buildings that are partially used as shops or offices) and apartment units (specifically functioning residential units). Against this backdrop, this edition summarizes the new provisions that have been introduced under MoFR 61, specifically as they relate to the following matters:

1. General Requirements
   MoFR 61 clarifies that the PPN DTP incentive applies to Property transfers at the time of signing of sale and purchase deeds prepared by land deed officials or fully paid sale and purchase agreements that are signed before notaries, and all such transfers must be completed between 1 September and 31 December 2024. The transfers also must be followed by actual handovers of the relevant rights to the Properties, as documented during this period in official handover reports.
   In addition, Properties must also meet the following criteria in order to be classified as eligible to enjoy the PPN DTP facility:
   • Must have a maximum selling price of Rp. 5 billion;
   • Must be new and ready to occupy (i.e. as identified by a house identification code and as transferred by the    seller for the first time without any prior transfers); and
   • In the case of down payments, the relevant down payment or the first instalment must be paid by 1 September 2024 at the earliest, and must fulfil the requirements for the securing of the PPN DTP facility between 1 September 2024 and 31 December 2024.

2. Eligible PPN DTP Receivers
   The PPN DTP facility may only be utilized by individuals for the acquisition of one type of Property (“Receiver”). Receivers must meet one of the following criteria:
   • Must be an Indonesian citizen who has secured a tax identification number (nomor pokok wajib pajak – “NPWP”) or a single identity number (nomor induk kependudukan/NIK); and
   • Must be a foreign citizen who has secured an NPWP, provided that they meet the legal requirements for Property ownership by foreign citizens, as applicable under law.

3. PPN DTP Exemptions.
   The VAT will not be covered by the government in several circumstances, including:
   The object transferred does not meet the criteria for Properties, as defined under MoFR 61;
   • Down payments or first instalment payments were completed before 1 September 2024;
   • The Property transfers occurred before 1 September 2024 or after 31 December 2024;
   • The transaction in question involves more than one type of Property being acquired by a single individual;
   • A Property is transferred within one year of its initial transfer; and
   • and so forth.

MoFR 61 clarifies that the PPN DTP granted will amount to 100% of the VAT owed on a taxable base of up to Rp. 2 billion, with a maximum sale price of Rp. 5 billion. This PPN DTP will apply during the September to December 2024 tax period and will cover VAT owed between 1 September and 30 September 2024.

It should also be noted that any individuals who utilized the PPN DTP incentive during the previous period may still benefit from this facility for purchases of other Properties.

Furthermore, the relevant sellers must issue tax invoices in accordance with applicable law and submit a PPN DTP realization report on the date that a given Property is transferred. Any failure to comply with these obligations will result in the imposition of administrative sanctions in accordance with applicable Laws and Regulations on taxes. It should also be noted that reports and corrections of VAT notifications for the September to December 2024 period can be used as realization reports.

The regulation became effective on September 11, 2024.