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Govt extends VAT cuts for new homes to year-end
The government has extended to December a VAT tax break on new houses, which has helped banks record second-quarter growth in housing loans.
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Shop-houses (Ruko) stand in a commercial development in Rawamangun, East Jakarta, in this file photograph from August 2017. (JP/Wienda Parwitasari)
T
he government has extended its temporary tax incentive for new home purchases until the end of the year in an effort to buoy the property and construction sectors amid the prolonged pandemic.
In a statement on Sunday, the Taxation Directorate General said Finance Ministry Regulation No. 21/2021, which took effect on July 30, had replaced an earlier regulation that would have seen the tax break end in August.
The new regulation waives value added tax (VAT) for properties priced less than Rp 2 billion (US$139,000), while it slashes VAT by half for homes priced between Rp 2 billion and Rp 5 billion.
Aside from extending the period of the tax incentive, the new regulation also expands the incentive’s scope to include dual-purpose properties, namely Ruko (shop-houses) and Rukan (office-houses). The preceding regulation only applied tax cuts to new landed houses and low-cost apartments.
“With the implementation of this new provision, the incentive is extended through December 2021,” said tax office spokesperson Neilmaldrin Noor.
Read also: Banks did better in H1, but could be 'calm before the storm'
The property tax break is one of many government measures aimed to stimulate household spending, which accounts for more than 55 percent of the economy. After contracting 5.52 percent in 2020, household spending booked year-on-year (yoy) growth of 5.93 percent in the second quarter of 2021.
