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Jakarta Post

Govt cuts income tax for luxury residences from 5 to 1 percent

  • News Desk

    The Jakarta Post

Jakarta   /   Wed, June 26, 2019   /   08:17 am
Govt cuts income tax for luxury residences from 5 to 1 percent Apartment towers fill Jakarta's cityscape. (Tempo/Tony Hartawan)

The Finance Ministry on Tuesday announced that it has officially cut the rate of income tax for luxury houses to 1 percent from the initial 5 percent in trying to help boost the property business.

The new policy was stipulated in Finance Ministerial Regulation No. 92/2019, which was an amendment of No. 253/2008 on the requirement for institutional taxpayers to pay taxes on the purchase and sales of luxury goods.

The first amendment of the regulation was stipulated in Regulation No. 90/2015.

Last week, Finance Ministry fiscal policy head Suahasil Nazara explained that the policy was introduced to boost the property business, particularly in luxury residences, which the government believed would have a significant multiplier effect on the country’s economy.

“The new rule on luxury residence taxes is significant because the business promises high margins for developers,” Suahasil said last Friday as quoted by

The new regulation was also believed to accommodate the government's policy that was announced last week, namely the change of the types of luxury residence categories from those priced from Rp 5 billion to Rp 10 billion to those priced from Rp 30 billion.

Under the regulation, effective since June 19, luxury residences are 500-square-meter houses or 150 sq m apartments or condominiums.

The government imposed a 1 percent income tax, excluding value added tax and sales tax, on luxury goods for those types of residences, while the rate for other luxury goods are 5 percent. (bbn)