Valued-Added Tax Exemption (PPN DTP)
During the COVID-19 pandemic in 2020, the economic activity in Indonesia had been negatively affected which pushed the government to implement several incentives to help the Indonesian citizens with the economic burden. One of such incentive is the value-added tax exemption paid by the government or Pajak Pertambahan Nilai Ditanggung Pemerintah (PPN DTP). Normally, property buyers must pay the full amount of the value-added tax (VAT).
The amount of this tax exempt is a maximum of IDR 2 billion with the exemption ending in December 2023. This tax exemption has a number of conditions which must be satisfied by the buyer:
- You are buying a free-standing house or apartments with the intention of using it as your main residence, shop, or business
- This tax exemption can only be utilized by one person for the purchase
- The house’s purchase value must not be greater than IDR 5 billion
- The house mortgage or payment must occur during the period of November 2023 to December 2023 for it to be tax exempt. Any mortgage payment outside of this period will not be tax exempt
- If the hand over documents are formalized during the period of November 2023 to June 2024, it will be 100% tax exempt
- If the hand over documents are formalized during the period of July 2024 to December 2024, it will be 50% tax exempt
Example 1:
You bought a house for IDR 6 billion with cash (no mortgage) and satisfy all the conditions mentioned for PPN DTP. In this case, you do not qualify for the tax exempt as your house is more than IDR 5 billion.
Example 2:
You bought a house for IDR 5 billion with cash (no mortgage) and satisfy all the conditions mentioned for PPN DTP. In this case you are tax exempt on the IDR 2 billion amount, but you still need to pay to the tax authority 11% ✖ IDR 3 billion = IDR 330 million.
Example 3:
You bought a house for IDR 2 billion with mortgage period of 4 months from September 2023 to December 2023 and satisfy all the conditions mentioned for PPN DTP. In this case, you still qualify for the tax exemption but only for the period November to December 2023. Thus, the payment for September 2023 is still taxable with a VAT rate of 11%.