3 Types of Land Sale and Purchase Taxes in Indonesia
Types of Land Sale and Purchase Taxes - Knowing the types of land sale and purchase taxes is not only the responsibility of the seller, but also the buyer.
In property transactions, taxes are imposed on both parties, even though the types are different.
Apart from the type, each tax is also calculated based on different variables so that it has a different amount.
In this country, there are at least two types of land sale and purchase taxes that are imposed on buyers and sellers.
The two types of taxes are Income Tax (PPh) and Land and Building Rights Acquisition Fee (BPHTB).
So, what is the tax rate charged for each of these taxes? Following is the complete review.
Types of Land Sale and Purchase Tax
1. Land Sale and Purchase Income Tax
Income tax is charged to land sellers according to the provisions contained in Government Regulation Number 34 of 2016.
It is stated that income earned by individuals or entities from the transfer of rights to land or buildings is subject to tax.
The amount of income tax imposed is 2.5% of the total (gross) value of the transfer of rights to the land being sold.
Income tax must be paid before taking care of the preparation of the Sale and Purchase Deed (AJB) with the Land Deed Making Officer (PPAT).
If not, it has the potential to cause problems in the form of land disputes in the future.
However, income tax is only imposed on the sale of land whose transaction value is above IDR 60 million.
If the selling price of the land is below IDR 60 million, it is not subject to the 2.5% income tax.
The provisions refer to Article 6 Point A of Government Regulation Number 34 of 2016.
However, to be able to enjoy the income tax exemption facility, the seller must obtain an Income Tax Exemption Certificate (SKB).
Therefore, it can be concluded that the 2.5% income tax is a type of land sale and purchase tax applicable to transactions above IDR 60 million.
Also read the article about How to Check BPJS Employment Balance with NIK KTP in Indonesia for Gipsum Larantuka friends who have BPJS.
2. BPHTB
The BPHTB is a type of tax imposed on buyers! The amount is 5% of the transaction value after deducting NJOPTKP (Non-Taxable Selling Value of Tax Objects).
The BPHTB collection process is carried out by the city government (pemkot) and local governments (pemda).
Similar to Income Tax, BPHTB is also classified as a type of land sale and purchase tax applicable to transactions above IDR 60 million.
Therefore, if the transaction value of the land is below IDR 60 million, it is exempt from the obligation to pay BPHTB.
The legal basis is contained in Law Number 28 of 2009 concerning Regional Taxes and Regional Levies.
3. Land Sale and Purchase VAT
Value Added Tax (VAT) is imposed on the sale of property, including land, houses, apartments, and so on.
VAT is a tax imposed on buyers and collected by sellers! Typically, for new residences, the VAT charged is 11% of the selling price of the property.
However, VAT is imposed if the property is purchased from a developer or seller with the status of a Taxable Entrepreneur (PKP).
If the seller is not a PKP, then the buyer must remit the VAT directly to the state treasury.
How to Calculate Land Sale and Purchase Tax
After getting to know the types of land sales tax, you should also know how to calculate them to avoid fraudulent practices.
As mentioned earlier, each type of tax has a different calculation scheme, such as:
1. How to Calculate BPHTB
For example, Dino wants to buy a house for sale in Bandung with a land area of 200 m² and a Selling Value of Tax Objects (NJOP) of IDR 300 million.
Assume that the Non-Taxable Selling Value of Tax Objects (NPOPTKP) of the land is IDR 100 million.
Since the transaction value of the land is above IDR 60 million, Dino is required to pay BPHTB.
The amount of BPHTB that Dino must pay is calculated as follows:
BPHTB = 5% x (IDR 300 million – IDR 100 million) = IDR 10 million.
2. How to Calculate Income Tax
The way to calculate the land purchase and sale tax is actually simpler.
An example is Irman who wants to sell a 100 m² plot of land for IDR 400 million.
The income tax that Irman must pay is calculated as follows:
Income Tax = 2.5% x IDR 400,000,000 = IDR 10,000,000
3. How to Calculate VAT
The method of calculating VAT is actually the same as calculating income tax.
For example, Andi buys a plot of land from a developer worth IDR 400 million. The transaction is subject to VAT of 11%.
The total VAT that Andi must pay is calculated as follows:
11% x IDR 400 million = IDR 44 million.
Tips for Buying Safe Land
There are several tips that you can follow to ensure land buying and selling transactions run safely and smoothly, including:
- Pay attention to and check the completeness of documents and important papers related to the land, such as original certificates, seller and buyer ID cards, and so on.
- Make sure the seller has paid Income Tax (PPh) if the land price is above IDR 60 million.
- The deed must be made in the presence of the seller and prospective buyer or representatives who have been given written power of attorney.
- Ensure there is a statement from the seller that the land is not in dispute.
That's an explanation of land sales tax and how to calculate it. Hope the information above is useful!
