On 12 February 2024, the Ministry of Finance issued a new regulation, Number 7 of 2024, regarding the Incentives of Value Added Tax (“VAT”) Borne by the Government (“DTP”) for Landed Houses and Residential Units (“MoF-7/2024”) as a new regulation aimed to stimulate the housing market in Indonesia. The government seeks to enhance the purchasing power of individuals by offering VAT incentives, encourage investment in the housing sector, and foster economic growth. This program builds upon the success of a similar initiative implemented in the previous year.

This regulation offers VAT incentives in which the government will bear the VAT on purchases of landed houses and residential units. The VAT incentive is a partial or complete reduction of the tax for eligible properties, i.e., purchase of new, ready-to-use landed houses and residential units with a maximum selling price of Rp 5 billion. The program is valid from 1 January 2024, to 31 December 2024. However, the level of VAT incentive varies depending on the handover date:

• Early Bird Incentive (1 January 2024 – 30 June 2024)
• Standard Incentive (1 July 2024 – 31 December 2024):

Purchasers completing the documentation above and receiving the handover report during this period will receive 50% VAT coverage up to Rp 2 billion on the tax base.

Individuals who previously availed of the VAT incentive program under MoF-120/2023 are still eligible to participate in this new program. Additionally, those who utilized a portion of the previous incentive and have outstanding VAT payments due in 2024 can apply the remaining benefit to those payments.

Purchasers who complete the sale and purchase agreements or fully paid agreements and receive the official handover report (BAST) within this period are entitled to a full 100% coverage of VAT on the tax base up to Rp 2 billion.