On 29 November 2023, the Minister of Finance stipulated regulation number 129/2023, providing a reduction in Land and Building Tax (PBB). The reduction in PBB can be granted through application or ex officio. The reduction in PBB can be provided based on two bases:

1.Certain conditions of Tax Objects that are related to the tax subject and Tax Objects that are owned, controlled, and/or utilized by taxpayers who have difficulties in paying Land and Building Tax as stated in Article 3 paragraph (3). The Taxpayers who experience difficulties in paying Land and Building Tax obligations are taxpayers who experience commercial losses and liquidity difficulties for two consecutive years. The reduction of Land and Building Tax can be granted at a maximum of 75% of the Land and Building Tax that has not been paid by the taxpayer; and

2.In case that the tax object suffers natural disaster or other extraordinary causes. Natural disasters are events or a series of events caused by nature, while other extraordinary circumstances are non-natural disasters or events caused by humans. This is in accordance with the provisions of disaster management legislation. The deduction of PBB granted in this case is up to 100%.

There are provisions and requirements for the application for a reduction in PBB. The reduction in PBB is granted based on the taxpayer’s application addressed to the Director General of Taxation and submitted through the Tax Office (KPP) where the Tax Object is registered. Applications for a reduction in PBB due to specific conditions of the Tax Object related to the taxpayer, based on the Notification of Tax Due (SPPT) or the Tax Assessment Letter (SKP), and for Tax Objects affected by natural disasters or other extraordinary causes based on the SPPT, SKP PBB, or  the Tax Collection Letter (STP PBB), must comply with the applicable conditions. Applications can be submitted in the year of the natural disaster or other extraordinary cause. In the event that an application for a reduction in PBB does not meet the stipulated conditions and requirements based on the examination results, the head of the Regional Office of the Directorate General of Taxation will return the application for a reduction in PBB to the taxpayer through a return letter, accompanied by the reasons for the return. Applications rejected for not meeting the conditions cannot be resubmitted, but applications rejected for not meeting the requirements can be resubmitted. The ex-officio reduction of PBB is granted to the taxpayers in cases where the Tax Object suffers from a natural disaster. The reduction can be up to 100% of the outstanding PBB, depending on the conditions of the Tax Object affected by the natural disaster.

This regulation became effective on 30 December 2023.