The Indonesian government has released policies on value added tax (VAT) borne by the government incentives on supplies of landed houses and flats units. These policies are outlined in the Minister of Finance Regulation No. 21/PMK.010/2021 concerning Value Added Tax Borne by the Government on Supplies of Landed Houses and Flats Units for Fiscal Year 2021 (MoF Reg. 21/2021).
This regulation, in essence, stipulates the granting of VAT borne by the government incentives for supplies of landed houses and flat units in the 2021 fiscal year. Moreover, this regulation also stipulates the time of supply of landed houses and flats units entitled to the VAT borne by the government incentives and applicable requirements to obtain these incentives.
A supply becomes entitled to VAT borne by the government incentives when the sale and purchase deed is signed or a certificate of full payment is issued by the seller. Both of these requirements apply if accompanied by a real transfer of rights as evidenced by an official report of handover.
Moreover, there are 2 requirements for landed houses and flat units to receive these incentives, i.e. (i) a maximum selling price of IDR5,000,000,000 and; (ii) the new landed house and the new flat unit are supplied in a turnkey condition. New landed houses and new flat units under this regulation refer to landed houses and flat units that are supplied for the first time by the developer and have never been transferred.
This regulation also stipulates the provisions on VAT payable borne by the government on supplies of landed houses and flat units for which down payment or installments have been made. In this regard, the VAT borne by the government incentives continue to be granted under the following conditions:
the down payment or first installment is paid to the seller no later than 1 January 2021;
the landed house and flat unit is supplied during the government-borne VAT incentive period as per this regulation, i.e. in the 2021 fiscal year;
VAT borne by the government is only granted on the VAT payable on the payment of the remaining installments and settlement paid during the VAT borne by the government period in the 2021 fiscal year.
VAT borne by the government incentives may only be used for 1 individual for the acquisition of 1 landed house or 1 flat unit. The amount of the government-borne VAT incentives is given in two forms, i.e.: (i) 100% of the VAT payable on the supply of a landed house or flat with a maximum selling price of IDR2,000,000,000; and (ii) 50% of the VAT payable on the supply of a landed house or flat with a selling price above IDR2,000,000,000. In this case, the VAT borne by the government is given for supplies made during March 2021 to August 2021 tax periods.
This regulation also regulates provisions on the obligation of taxable persons for VAT purposes that supply landed houses and/or flat units, i.e. preparing tax invoices and reports on the realization of VAT borne by the government. The tax invoice must be filled in completely and correctly and include the buyer's identity in the form of the buyer's name and taxpayer identification number (Nomor Pokok Wajib Pajak/NPWP) or Single Identity Number (Nomor Induk Kependudukan/NIK)). In addition, the prepared tax invoices must be completed with the information of VAT by the government incentives based on MoF Reg. 21/2021.
This regulation, on the other hand, stipulates the criteria of VAT payable on supplies of landed houses and flat units that is not borne by the government. These incentives do not apply to supplies that (i) are performed after the end of the VAT borne by the government period; (ii) are carried out prior to the entry into force of this regulation; (iii) are transferred within 1 year from the time of supply; (iv) do not use tax invoices as regulated in this regulation; (v) do not file the realization report.
In contrast, the Tax Office (Kantor Pelayanan Pajak/KPP) on behalf of the Director General of Taxes is authorized to collect outstanding VAT. This authority is given if data or information showing several things is found, i.e.: (i) the supplied object does not constitute taxable goods referred to in this regulation; (ii) the acquisition of more than 1 unit that receives the VAT borne by the government incentives by one individual; (iii) the tax period does not correspond to the tax periods referred to in this regulation; (iv) supplies do not meet the requirements stipulated in this regulation; and (v) transfer is carried out within 1 year from the supply.
This regulation affirms that supplies of landed houses and/or flat units that have received VAT exemption facilities cannot take advantage of the VAT borne by the government incentives. In terms of the implementation and accountability of government-borne tax subsidy spending, this regulation shall be implemented as per statutory provisions. The provisions under this regulation have come into effect as of the promulgation date, i.e. on 1 March 2021.