Tax on property income in Indonesia
Taxation Researcher | October 19, 2018
Effective Tax Rate on Rental Income
|Click here to see a worked example|
Nonresidents are liable to pay tax on Indonesian-sourced income. Married couples are generally taxed jointly but may opt for separate taxation if there is a pre-nuptial agreement between husband and wife.
Nonresidents are taxed at a flat rate of 20%. Double-taxation agreements between Indonesia and other countries may reduce this to 10%.
The rental income of nonresidents is taxed at a final withholding rate of 20% of gross income.
Land and Building Transfer Duty
The land and building transfer duty is levied at a flat rate of 5%, and is charged to the seller. The tax base is the transfer value of the property. There is a non-taxable amount which varies per region, and the non-taxable amount is IDR80 million (US$5,504) in Jakarta. This tax is different from the transfer tax.
Transfer tax is levied on the sale of real property in Indonesia at a flat rate of 5%. The tax base is the transfer value of the property, without any deductions.
Sales Tax on Luxury Goods
Sales of luxury houses, apartments, townhouses, and condominium units are subject to 20% sales tax. Luxury houses and townhouses have a selling price of IDR20 billion (US$1,376,107) and above. Luxury apartments and condominium units have a selling price of IDR10 billion (US$688,054) and above.
Property Tax (Pajak Bumi dan Bangunan, PBB)
Property tax is levied at progressive rates on the assessed value of the property.
|TAX BASE, IDR (US$)||TAX RATE|
|Up to 200 million (US$13,761)||0.01%|
|200 million – 2 billion (US$137,611)||0.10%|
|2 billion – 10 billion (US$688,054)||0.20%|
|Over 10 billion (US$688,054)||0.30%|
|Source: Global Property Guide|
Income and capital gains earned by companies are taxed at a flat rate of 25%. Income-generating expenses and operating expenses are deductible when computing for the taxable income.