Foreign sellers need to specifically understand Final Income Tax (PPh Final), which is set at 2.5% of the total transaction value, excluding Value Added Tax (PPN) and Luxury Goods Tax. Importantly, this tax is calculated based on the actual selling price, not the fiscal value. Sellers must ensure validation from the Tax Office at the time of sale, whether the property is in the name of the buyer or the developer. The transfer of the Sales and Purchase Agreement triggers this obligation. Developers handling sales must issue tax invoices according to the applicable code and settle Value Added Tax (11%) and Luxury Goods Tax (20%) with the government.
As a buyer, understanding Income Tax 22 is crucial. This tax, similar to a credit for buyers owed before the Sales and Purchase Agreement, is reported in the Annual Tax Notification no later than March of the following year. The criteria for this tax are set at 1% of the transaction value, depending on factors such as land value or property size. Also, take note of Value Added Tax (11%) and Luxury Goods Tax (20%), with the latter applying to transactions above Rp 30 billion.
From Final Income Tax for sellers to Income Tax 22 for buyers and beyond, foreign investors must grasp the intricacies of these taxes. Thorough research, legal guidance, and staying up-to-date with changing regulations are crucial. By deciphering the tax code, you can navigate the enchanting world of Indonesian property smoothly.
Source: Guidelines on Foreigners’ Property Ownership in Indonesia