On 10 December 2019, the Minister of Finance (“MoF”) issued a new Regulation No 186PMK.03/2019 (“PMK-186”) to revoke PMK-131/PMK.03/2017 (“PMK-131”) and PMK-139/PMK.03/2014 (“PMK-139”) concerning the Classification of Tax Objects and Procedures for Determining Tax Base of Land and Building Tax .

The key points of PMK-186 are as follows:

Classification of Land and Building Tax

The new PMK changes the classification of Land and Building Tax Objects, which previously consisted of four classifications, into six classifications: Land and Building Tax of Plantation Sector, Land and Building Tax of Forestry Sector, Land and Building Tax of Oil and Gas Sector, Land and Building Tax of Geothermal Sector, Land and Building Tax of Mineral and Coal Sector, and Land and Building Tax of Other Sectors.

1. The areas for Land and Building Tax of the Plantation Sector are:
   • area as stated in the for License  Cultivation, License of Plantation Business, Permanent License for Cultivation, and/or Cultivation Rights Title for Plantation; and
   • area outside the area as mentioned above which is a single entity used for plantation business activities and is physically inseparable.

Not intended as area as mentioned above is area that has been granted a Plantation-Processing Business License.

2. The areas for Land & Building Tax of the Forestry Sector are:
   • areas as stated in IUPHHK-HA [Business Permit for Utilization of Forest Timber Product in Natural Forest] and/or IUPHHBK-HA [Business Permit for Utilization of Forest Non-Timber Product in Natural Forest], IUPHHK-RE [Business Permit for Utilization of Forest Timber Product through Ecosystem Restoration], IUPHHK-HTI [Business Permit for Utilization of Timber Forest Product in Industrial Planted Forest] and/or IUPHHBK-HT [Business Permit for Utilization of Forest Non-Timber Product in Planted Forest], or assignments from the government to the State Forest Public Enterprise (Perum Perhutani) based on laws and regulations; and
   • area outside the area as mentioned above which is a single entity used for forestry business activities and is physically inseparable.
3. The areas for Land & Building Tax of the Oil and Gas Sector are:
   • Oil and Gas Work Areas as stated in the agreements;
   • area outside the area as mentioned above which is a single entity used for Oil and Gas business activities and is physically inseparable.
4. The areas for Land & Building Tax of the Geothermal Sector are:
   • Geothermal Work Areas as stated in the Geothermal License, Geothermal Resources Business Concession, Joint Operation Contract for Geothermal Resources Businesses, Geothermal Resources Business License, or geothermal business assignment;
   • area outside the area as mentioned above which is a single entity used for geothermal business activities and is physically inseparable.
5. The areas for Land & Building Tax of the Mineral and Coal Sector are:
   • area as stated in the Mining Business License, Special Mining Business License, Smallholder Mining License, Contract of Work, or Coal Mining Enterprise Contract of Work;
   • area outside the area as mentioned above which is a single entity used for mineral and coal mining business activities and is physically inseparable.
6. The Land & Building Tax of Other Sectors covers waters that are used for:
   1. capture fisheries;
   2. fish cultivation;
   3. pipeline network;
   4. cable network;
   5. toll roads; or
   6. storage and processing facilities, include Floating Storage and Offloading (FSO), Floating Production System (FPS), Floating Processing Unit (FPU), Floating Storage Unit (FSU), Floating Production Storage and Offloading (FPSO), and Floating Storage Regasification Unit (FSRU).

Procedure for Determining Tax Object Sales Value

The Tax Object Sales Value (NJOP) constitutes the basis for assessment of Land and Building Tax. This value is the sum of the NJOP of Land and the NJOP of Building. Evaluation of the tax objects to determine the NJOP of land and NJOP of building is carried out by the Tax Appraiser.

The calculation of Land & Building Tax in a Contract of Work, Coal Mining Enterprise Contract of Work, or Special Mining Business Licence for Production Operations shall follow the provisions in the Contract of Work, Coal Mining Enterprise Contract of Work, or Special Mining Business Licence for Production Operation.

This MoF Regulation became effective starting 1 January 2020.