Indonesia plans to cut taxes on luxury properties and revise other tax rules in a bid to support the real estate industry and attract investment in Southeast Asia’s biggest economy, Finance Minister Sri Mulyani Indrawati said.
The threshold for a luxury tax of 20 percent applied to houses and apartments would be raised to at least Rp30 billion (US$2.06 million) from Rp20 billion, she said in comments published on the cabinet secretary’s website late on Wednesday.
Sales of luxury property will also be subject to a lower tax of 1 percent of the selling price, against 5 percent now.
“We hope the business side of the construction sector will be boosted,” Indrawati said. She did not give a timetable and said the regulations were currently being formulated.
Indonesian policy makers have been keen to kickstart the country’s sluggish property sector in a bid to help lift an economic growth rate that has been stubbornly stuck at around 5 percent in recent years.
S&P Global Ratings warned on Wednesday that the finances of local real estate developers and state firms might deteriorate in 2019 due to risks rooted in general elections and a further depreciation for the rupiah currency.
Indrawati said the government is also considering other tax incentives to boost exports, such as removing value-added tax (VAT) on some service exports, including accounting and legal, and cutting tax rates on time deposits for exporters.