Indonesia’s Minister of Finance Sri Mulyani Indrawati just signed a new regulation regarding the imposition of tax on luxury goods. The policy is outlined in the Ministry of Finance Regulation (PMK) No. 35/PMK.010/2017. It pertains to various types of taxable luxury goods apart from motorized vehicles.
As stated by the Directorate General of Legislation Ministry of Justice and Human Rights Widodo Ekatjahjana, the new regulation went into effect on March 1, 2017.
According to this newly enforced rule, sales tax on luxury goods will be imposed on various properties in the residential category including luxury homes, apartments, condominiums, townhouses and more. The sales tax itself will be 20 percent of the sale price.
The stipulated regulation states that there are several categories of luxury property that will also be taxed.
“The first type is non-titled houses and townhouses with selling prices of Rp.20 billion (US$1,495,206) or more. Next are apartments, condominiums, titled townhouses and those with selling prices of Rp.10 billion (US$747,664) or more,” the PMK outlines as stated by the Cabinet Secretariat of Republic of Indonesia’s website.
Further, there are other luxury goods that will be given a 40 percent sales tax. They include air balloons, air balloons that can be steered and other aircraft without propulsion.
Other than that, types of bullets for guns and other firearms, excluding those for state-related purposes (with the exception of air rifle bullets), are subject to the same tax imposition.
Next on the list are luxury goods that are subject to a 50 percent tax. These include aircraft other than those listed in Annex II, with the exception of those for state-related purposes or commercial air transportation, helicopters and other aircraft and aerial vehicles.
The list goes on to state more items that are to be taxed as luxury goods.
But back on the property beat, considering that the government recently make it okay for foreigners to purchase homes in the archipelago, expats should now take the PMK regulation into consideration before making an offer on the market. Many of the housing units that foreigners are legally allowed to buy will be affected.
“The new regulation will accommodate foreign investors who buy apartments in Indonesia. It also complies with the Basic Agrarian Law Act that allows foreign residents to own an apartment. However, they can’t own public housing,” said ex-Minister of Agrarian and Spatial Planning Ferry Mursyidan Baldan as quoted by Detik.