The government, through the Ministry of Finance, is offering various incentives, including tax incentives for land and/or building investments in an effort to encourage investment in the new capital city of Nusantara (IKN).
These incentives are outlined in Minister of Finance Regulation No. 28/2024 on Tax and Customs Facilities in Nusantara Capital. One form of tax incentive offered is a reduction in income tax (PPh) on the transfer of rights to land and/or buildings in IKN.
According to the Minister of Finance Regulation No. 28/2024, taxpayers who transfer rights to land and/or buildings in IKN, where the land and/or building is transferred back, including through a sale and purchase agreement, will receive a 100 percent PPh reduction.
This reduction is available until 2035, provided the taxpayer electronically requests a tax exemption certificate (SKB) from the tax office where the taxpayer is registered.
To apply for the SKB, taxpayers must submit it for each transfer of land and/or building rights and must have filed their Annual Tax Return (SPT) for the last two years and the VAT Periodic Tax Return (SPT Masa PPN) for the last three periods.
In addition to the PPh reduction, another tax incentive offered is an exemption from VAT (PPN) on new buildings such as detached houses, apartment units, offices, shops/shopping centers, or warehouses provided by certain individuals, entities, and/or specific ministries/agencies.
The term “certain individuals” refers to Indonesian citizens (WNI) or foreign nationals (WNA) who have a tax identification number (NPWP), national identification number, or passport. Meanwhile, “certain entities” are those established and/or based in Indonesia, evidenced by an NPWP.
The VAT exemption on detached houses or apartment units is limited to those used as residences and does not include those used partly or wholly as shops or offices.
These houses or apartment units must have an identification code from the Ministry of Public Works and Housing (PUPR) or the Tapera Management Agency and be handed over ready for occupancy − detached houses within two years of downpayment and apartment units within four years.
Each individual is limited to one detached house or apartment unit under the VAT exemption, and for foreign nationals, the unit must have a minimum sale price of five billion rupiah.
To qualify for the VAT exemption, buyers must obtain a non-taxable certificate (SKTD) before the VAT liability arises. Applications for the SKTD must be submitted electronically through a specific channel on the Directorate General of Taxes (DJP) website.
