In order to increase economic growth, there is a need for an acceleration in the infrastructure’s development for the public’s importance, ease of access to doing business, and as a form of safety for citizens with lower income.
To better provide information and simplicity in calculating Income Tax on income received or obtained in correlation to a transactional agreement and their amendments, the imposition of Income Tax on said income is then changed into Final in nature for both Individuals or Corporations as the buyer, of which their name is mentioned in the sale and purchase binding agreement before changes or addendums to the sale and purchase binding agreement occur.
Furthermore, to provide a legal basis and ease in Income Tax payment for both Individuals and Corporations that conduct transfer of rights on Land and/or Building and receive or obtain income from said transfer of rights, Income Tax is payable upon receipt of part or all of the payment for the transfer of rights to land and/or buildings.
Tax Subject
Article 4(2) Income Tax is imposed on individuals or corporations that are sellers or the party that transfers their rights as the income receiver.
Payment of Final Income Tax on the transfer of rights on land and/or building is exempted for the following subjects:
Individuals with income below the Non-Taxable Income (PTKP) level and are doing a transfer of rights on land and/or building with a gross amount of less than IDR60,000,000 and is not a distributed amount
Individuals that are conducting the transfer of assets in the form of land and/or building by using grants as the medium of transfer, given to direct blood relatives, religious institutions, educational institutions, social institutions including foundations, cooperatives, or private individuals running micro and small businesses, the provisions of which are further regulated by a Minister of Finance Regulations, as long as the grant does not have any business, employment, ownership, or control between the parties involved
Corporations that transfer assets in the form of land and/or buildings by way of grants to religious institutions, educational institutions, and social institutions including foundations, cooperatives, or individuals running micro and small businesses, the provisions of which are further regulated by a Minister of Finance Regulation, as long as the grant does not have any business, employment, ownership, or control between the parties involved
Transfer of assets in the form of land and/or buildings due to inheritance
Corporations that transfer assets in the form of land and/or buildings in relation of a business merger, consolidation, or expansion that has been determined by the Minister of Finance to use book value
Individuals or Corporations that transfer assets in the form of a building in order to carry out a building-to-transfer agreement, building-to-hand over, or utilization of state-owned goods in the form of land and/or buildings, or
Individuals or Corporations that are not a tax subject transferring assets in the form of land and/or buildings.
Tax Withholder
Article 4(2) Income Tax must be withheld by individuals or corporations that received or obtained income coming from the transfer of rights on land and/or buildings.
Tax Object
Article 4(2) Income Tax is imposed on income received or obtained by individuals or corporations, that came from:
The transfer of rights on land and/or building, or
A binding Sales and Purchase Agreement (PPJB) for land and/or buildings and any amendments thereto
Rights on land and/or buildings refers to all rights on land and/or buildings in the form of:
property rights, business use rights, building use rights, and usage rights, as regulated in the Law regarding fundamental agrarian regulations,
ownership rights to the condominium unit and ownership of the condominium unit building as regulated in the Law regarding condominiums.
A binding Sales and Purchase Agreement (PPJB) for land and/or buildings is a sale and purchase agreement between the parties, which can be in the form of a sale and purchase binding agreement, unit order letter, advance payment receipt, or other forms of agreement between the parties selling or intending to sell the land and/or buildings and parties who buy or intend to buy land and/or buildings.
Income from the transfer of rights to land and/or buildings is income received or obtained by the party transferring rights to land and/or buildings through sales, exchanges, transfer of rights agreements, relinquishment of rights, transfer of rights, auctions, grants, inheritance, or other means agreed between the parties.
Meanwhile, income from Sales and Purchase Agreement (PPJB) for land and/or buildings is income received or earned by:
the seller whose name is listed in the Sales and Purchase Agreement when the agreement is first signed, or
the buyer whose name is listed in the Sales and Purchase Agreement prior to the amendment or addendum to theSales and Purchase Agreement, in the event that there is a change in the buying party in the Sales and Purchase Agreement.
Tax Basis Imposition
The imposition basis for Article 4(2) income Tax is the value of the transfer of rights to land and/or buildings, namely:
value based on the decision of the authorized officials, in the case of transfer of rights to the government,
value according to the auction reports, in the case of transfer of rights in accordance with auction regulations (Vendu Reglement Staatsblad of 1908 Number 189 and its amendments),
the actual value received or obtained, if the transfer of rights to land and/or buildings is carried out through sale and purchase not influenced by a special relationship, other than the transfer as intended in letters a and b,
the value that should be received or obtained, if the transfer of rights to land and/or buildings is carried out through buying and selling influenced by a special relationship, other than the transfer as intended in letters a and b, or
the value that should be received or obtained is based on market prices, if the transfer of rights to land and/or buildings is carried out through exchange, release of rights, assignment of rights, gift, inheritance, or other means agreed between the parties involved.
Tax Rate
0% on the transfer of rights to land and/or buildings to the government, state-owned enterprises that have received a special assignment from the Government, or regional-owned enterprises that have received a special assignment from the regional head, as intended in the law governing land acquisition for development for the public interest,
1% of the gross value of the transfer of rights to land and/or buildings in the form of Simple Houses and Simple Flats carried out by Taxpayers whose main business is transferring rights to land and/or buildings, or
2.5% of the gross amount of the transfer value of land and/or building rights, other than the transfer of land and/or building rights as intended in letters a and b.
Tax Due Date
Article 4(2) Income Tax on income received from the transfer of rights on land and/or buildings is imposed with payable tax upon receipt of part or all of the payment for the transfer of rights to land and/or buildings. Payable Article 4(2) Income Tax is calculated based on every payment made, including down payment, interest, levies, and other additional payments fulfilled by the buyer, in connection with the transfer of rights to the land and/or building.
Withholding Tax Procedure
Article 4(2) Income Tax is paid by the individual or corporation that receives or obtains income from the transfer of rights to land and/or buildings before the deed, decision, agreement, or auction reports on the transfer of rights to land and/or buildings is signed by an official authority.
The authorized official will only sign a deed, decision, agreement, or auction reports on the transfer of rights to land and/or buildings if it is proven by the individual or corporation that the obligation has been fulfilled by submitting a copy of the Tax Payment Letter or a printout of other equivalent administrative means with the relevant Tax Payment Letter which has been researched on by the Tax Office.
For individuals or entities whose main business is transferring rights to land and/or buildings which receive or obtain income from the transfer of rights to land and/or buildings, Income Tax is payable upon receipt of part or all of the payment for the transfer of rights of land and/or buildings.
Income Tax is calculated based on the amount of each payment including down payments, interest, levies, and other additional payments fulfilled by the buyer, in connection with the transfer of rights of the land and/or building.
Individuals or corporations that receive or obtain income from the transfer of rights of land and/or buildings through sale and purchase or exchange to the government are subject to Income Tax withheld by the government treasurer, the officials who makes the payment, or the officials who approves the exchange.
The government treasurer or officials must deposit the withheld Income Tax to the bank/post before making payment to the individual or corporation entitled to receive it or before the exchange is carried out.
Repayment of the payable Income Tax on income from changes to the sale and purchase agreement for land and/or buildings is made through self-payment by an individual or corporations purchasing and whose name is listed in the Sales and Purchase Agreement prior to the amendment or addendum to the sale and purchase agreement.
The seller only signs amendments or addendums of the Sales and Purchase Agreement if it is proven that the obligations have been fulfilled by submitting a copy of the Tax Payment Letter or a printout of other administrative means equivalent to the relevant Tax Payment Letter, which has been researched by the Tax Office.
Tax Payment Procedure
The Income Tax Withholder must pay the Income Tax to the Tax Office or banks appointed by the Ministry of Finance, no later than the 15th (fifteenth) day of the following month after the month the tax withholding is made.
The payment is made using a Tax Payment Slip with the tax account code 411128 for Article 4(2) Income Tax and the payment code for the transfer of rights on land and/or building activity is 402.
If the tax payment due date coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the payment can be made on the next working day.
Tax Filing Procedure
Withholders of Article 4(2) Income Tax must report the withheld income tax on the Unification Income Tax Returns no later than the 20th (twentieth) day after the tax period ends.
If the filing due date of the Article 4(2) Final Income Tax return coincides with a holiday including Saturday, Sunday, national holidays, days off for holding the General Election, or national collective leave, the filing can be made on the next working day.
Individuals who received income from the transfer of rights on land and/or building, which has been withheld with Article 4(2) Income Tax, are obliged to file income made from the sale of shares in the stock exchange and the withheld Article 4(2) Income Tax on their Individual Annual Income Tax Returns by 3 (three) months after the end of the Tax Year.
Corporate taxpayers that receive income from the transfer of rights on land and/or building and have been withheld with Article 4(2) Income Tax, then must file the income and the withheld Article 4(2) Income Tax on Attachment IV of the Corporate Taxpayers Annual Tax Returns by 4 (four) months after the end of the Tax Year.
Example Calculation on Article 4(2) Income Tax on Income from Transfer of Rights on Land and/or Building
Illustration 1
Mrs. Voni sold her shophouse to Mrs. Dona at a value of IDR1,000,000,000. On 9 October 2023, the Sales and Purchase Agreement is signed with a three-times installment payment, each set at:
IDR300,000,000 – Paid on 9 October 2023 when the Sales and Purchase Agreement was signed
IDR300,000,000 – Paid on 9 November 2023
IDR400,000,000 – Paid on 9 January 2024
On 16 February 2024, the Notarial Sale & Purchase Agreement (AJB) is signed by both parties. The Income Tax that must be paid by Mrs. Voni towards the national fund is:
Date | Payment Amount | Payable Income Tax |
(1) | (2) | (3) = 2.5% x (2) |
9-10-2023 | IDR300.000.000 | IDR7.500.000 |
9-11-2023 | IDR300.000.000 | IDR7.500.000 |
9-01-2024 | IDR400.000.000 | IDR10.000.000 |
Illustration 2
On 1 February 2024, Mr. Anton sold a house with a cash payment under the hands of Mr. Indra, with a value of IDR2,000,000,000. On the transaction for the house, Mr. Indra did not create a Sales and Purchase Agreement with Mr. Anton, but rather received an attorney power letter from Mr. Anton to sell and a power letter to sign the Notarial Sale & Purchase Agreement.
On 5 July 2024, Mr. Indra sold the house to Mrs. Rivelia with a value of IDR2,200,000,000, and received full payment at the same time. On 6 July 2025, the signing of the Notarial Sale & Purchase Agreement by Mr Indra, Mrs. Rivelia, and the Land Deed Making Official is done.
Payable Article 4(2) Income Tax is as follows:
The power of attorney to sell and the power of attorney to sign the AJB are basically PPJB.
Therefore, PPh Article 4 (2) which is payable on 1 February 2024, in the amount of 2.5% x IDR 2,000,000,000.00 = IDR 50,000,000.00 must be paid to the State Treasury by Mr. Anton no later than 15 March 2024.
Income Tax payable at the time of transfer from Mr. Indra to Ms. Rivelia in the amount of 2.5% x Rp. 2,200,000,000.00 = Rp. 55,000,000.00 must be paid to the State Treasury by Mr. Indra no later than before the AJB is signed by the Land Deed Official.
Legal Basis:
Law Number 7 Year 1983 regarding Income Tax as lastly amended by Law Number 7 Year 2021 regarding Harmonization of Tax Regulations
The Government Regulations Number 34 Year 2016 regarding the Imposition of Income Tax on Income from the Transfer of Rights of Land and/or Building, and the Sales and Purchase Agreement on Land and/or Building and its Amendments
The Ministry of Finance Regulations Number 261/PMK.03/2016 regarding Procedures For The Payment, Reporting, And Exemption From The Imposition Of Income Tax On Income From The Transfer Of Right On Land And/Or Building, And Agreement On Commitment To Sale And Purchase Of Land And/Or Building And Their Changes
The Directorate General of Taxes Regulations Number PER - 08/PJ/2022 regarding Procedure For The Examination Of Evidence Of The Fulfillment Of Obligation To Pay Income Tax On Incomes From The Transfer Of Right To Land And/Or Building, And Land And/Or Building Sale And Purchase Commitment Agreement Along With The Amendments Thereto
The Directorate General of Taxes Circular Letter Number SE - 30/PJ/2013 regarding The Implementation Of Final Income Tax on Income For The Transfer of Land and/or Building Rights Received or Obtained By Taxpayers Whose Principal Business is Transferring Land and/or Building Rights and Determination of the Gross Amount of the Transfer Value of Land and/or Building Rights by Taxpayers Who Transfer Land and/or Building Rights
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