Indonesia makes the government bear VAT on new homes up to Rp 5 billion under PMK 120/2023

What changed in detail

Minister of Finance Regulation (PMK) No. 120 of 2023, on government-borne VAT on the delivery of landed houses and apartment units for budget year 2023, was set and promulgated on 21 November 2023. It applied to deliveries from 1 November 2023.

Under Article 7, as the Directorate General of Taxes (DJP) explained in press release SP-37/2023, the government bore the VAT in two periods:

• 1 November 2023 to 30 June 2024: 100% of the VAT on the tax base (DPP).
• 1 July 2024 to 31 December 2024: 50%.

The relief applied only to the part of the tax base up to Rp 2 billion, and only where the selling price was no more than Rp 5 billion. DJP’s example: on a Rp 5 billion house, the government bears 11% of Rp 2 billion, which is Rp 220 million. A house priced at Rp 6 billion gets nothing.

Other conditions in the release:

• Each NIK or NPWP could use the incentive once.
• The unit had to be a new house or apartment with a house identity code from the Ministry of Public Works and Housing or BP Tapera application.
• The unit could not be transferred within one year of handover.
• Instalment sales qualified, including those where the down payment or first instalment was paid from 1 September 2023.

What it means

This was the first instrument in a chain of Indonesian housing VAT incentives. The relief is spent. PMK 7/2024 (id-ppn-dtp-housing-pmk7-2024) took over deliveries from 1 January 2024 on the same 100%/50% split. PMK 61/2024 then raised September to December 2024 to 100%.

The scheme was renewed each year after that: PMK 13/2025 and PMK 60/2025 for 2025, and PMK 90/2025 for 2026 (100% for January to December 2026). For a 2023 or 2024 delivery, the date of delivery decides which period applies and so which rate the buyer got.