The Ministry of Finance extends the validity period of VAT borne by the government (Ditanggung Pemerintah/DTP) on houses. The extension of the incentives is stipulated in the Minister of Finance Regulation No. 103/PMK.010/2021 concerning Value Added Tax Borne by the Government on Supplies of Landed Houses and Flat Units for the 2021 Fiscal Year (MoF Reg. 103/2021).
As per the considerations in the regulation which revokes MoF Reg. 21/2021, the extension is expected to maintain people’s purchasing power in the housing industry sector to affect the national economic recovery. VAT DTP is granted on supplies conducted from the March 2021 taxable period until the December 2021 taxable period. Formerly, this incentive was only valid until August 2021.
This regulation stipulates that VAT payable on supplies of landed houses and flat units that meet the requirements is borne by the government for the 2021 fiscal year. A landed house refers to a building in the form of a single house or rowhouse, both multi-storey and non-storey, which serves as a residence fit for habitation, facilities for family development, a reflection of the occupants’ dignity, as well as an asset for the owner, including a residential building which is partly used as a shop or an office. A flat unit, on the other hand, refers to a flat that serves as a place of residence.
In accordance with Article 3 paragraph (1) of MoF Reg. 103/2021, the VAT payable that may be borne by the government covers a supply taking place when the sale and purchase deed is signed or the settled sale and purchase agreement is signed. On another note, incentives may be given if the actual transfer of rights to use or control a turnkey landed house or a turnkey flat unit is proven by minutes of handover no later than 31 December 2021.
The minutes of handover must be registered in the application system at the ministry administering government affairs in the sectors of housing and residential area no later than the following 7 months after the month the handover is carried out. The minutes of handover must contain at least six things as follows.
- the name and taxpayer identification number of the taxable person for VAT purposes (Pengusaha Kena Pajak/PKP) as the seller;
- the buyer’s name and taxpayer identification number or single identity number;
- date of handover;
- the identification code of the handed over house;
- statement with a stamp duty that the building handover has been performed; and
- number of the minutes of handover.
Furthermore, landed houses or flat units entitled to the VAT incentives must meet two requirements, i.e. having a maximum selling price of IDR5 billion and constituting new landed houses and flat units that are supplied in a turnkey condition. A new landed house or a new flat unit is a landed house or a flat unit that has obtained a housing identification code and is supplied by the seller as a taxable person for VAT purposes for the first time and has never been transferred.
The abovementioned housing identification code refers to the identification code for a landed house and flat unit provided through the application system at the ministry administering government affairs in the sectors of housing and residential area. In the event that an advance payment or installment has been made to the PKP for a landed house and flat unit, the seller remains eligible for VAT DTP under the following conditions.
- the first down payment or installment to the seller as a PKP is no later than 1 January 2021;
- provisions on the supply are fulfilled during the validity period of VAT DTP incentives; and
- VAT DTP is given only for VAT payable on payments of the remaining installments and settlements paid during the validity period of VAT DTP.
A 100% VAT DTP incentive is granted for supplies of new landed houses or flats with a maximum selling price of IDR2 billion. Moreover, a 50% VAT DTP incentive applies to supplies of landed houses and flats with selling prices above IDR2 billion to IDR 5 billion. The VAT DTP incentives apply to landed houses or flats that are handed over no later than 31 December 2021.
The incentive is valid for a maximum of 1 landed house or flat for 1 individual and may not be resold within 1 year. The individuals include Indonesian citizens with a Taxpayer Identification Number (TIN) (Nomor Pokok Wajib Pajak/NPWP) or a Single Identity Number (Nomor Induk Kependudukan/NIK). On another note, the individuals also include foreign citizens (Warga Negara Asing/WNA) who have a TIN insofar as they fulfill the provisions on homeownership.
PKP supplying property are required to prepare tax invoices and report the realization of VAT DTP incentives. The tax invoices must be filled out completely and correctly and contain the buyer’s identity, including the buyer’s name and TIN or NIK, and attached with information on the housing identification code. Next, the tax invoices are attached with information on the housing identification code in the item name column.
Tax invoices for supplies of landed houses and flat units entitled to the VAT DTP incentive of 50% of the VAT payable are prepared by issuing two tax invoices. The two tax invoices consist of a tax invoice with transaction code 01 for 50% of the selling price not entitled to the VAT incentive and transaction code 07 for 50% of the selling price entitled to the VAT incentive.
The tax invoice must be given the statement “VAT BORNE BY THE GOVERNMENT, EXECUTION OF MOF REG. NUMBER ... /PMK.010/2021”. In the event that this information is not yet available in the application for generating tax invoices, the PKP may update the information that can be included on the tax invoice through said application.
This regulation also stipulates matters leading to the ineligibility of supplies of landed houses and flat units for VAT DTP incentives. These incentives cannot be given if the supplies are carried out before or after the validity period of the VAT DTP incentives, transferred within one year of the supply, no tax invoices are used, the realization reports are not reported, and/or the minutes of handover are not registered.
Landed houses and/or flat units that have obtained the VAT exemption facility as per statutory provisions cannot take advantage of VAT DTP based on MoF Reg. 103/2021. The implementation and accountability of DTP tax subsidies on VAT payable on supplies of landed houses and/or flat units are carried out as per statutory provisions.
Supplies of property that comply with the provisions but carried out before the enactment of MoF Reg. 103/2021 remain eligible for the VAT DTP incentives. In this case, the PKP must register the minutes of property handover in the application system no later than 31 August 2021. With the enactment of this regulation, MoF Reg. 21/21 is declared revoked and invalid. Promulgated on 30 July 2021, this ministerial regulation came into force thereafter.