The Indonesian government has approved a new tax incentive for homebuyers. The program reintroduces the PPN DTP scheme, under which the government covers the value-added tax (VAT) on behalf of the buyer. The relevant Ministry of Finance regulation (PMK 90/2025) is valid from January 1 to December 31, 2026, and applies to the purchase of new houses and apartments.
VAT is exempted on the portion of the property price up to IDR 2 billion (approximately USD 118,000). The maximum property price eligible for the program is IDR 5 billion (around USD 296,000).
Indonesia’s current VAT rate is 11%. This means that for properties priced up to IDR 2 billion, the potential VAT savings under the PPN DTP scheme amount to approximately IDR 220 million. If the property price exceeds this threshold, VAT is not charged on the first IDR 2 billion and is applied only to the excess. For example, for a property priced at IDR 3 billion, VAT would be around IDR 110 million instead of IDR 330 million.
The incentive applies exclusively to new properties purchased directly from developers and can be used only once per person for a single transaction. Secondary market properties, as well as units that have previously benefited from similar tax incentives, are not eligible.
A key factor is the date of legal completion. To qualify for the incentive, the legal transfer must take place in 2026, either through:
- signing a Sale and Purchase Deed (AJB) before a PPAT, or
- a fully paid and notarized preliminary sale agreement (PPJB).
Reservations or initial payments alone do not qualify.
The program also applies to foreigners, provided the purchase complies with Indonesia’s current property ownership regulations.
In practice, the main risks include:
- A developer advertises a “VAT-free” purchase but fails to officially apply the PPN DTP scheme — in such cases, the tax may surface later.
- The contract does not explicitly state that VAT is covered by the government, meaning the incentive is not legally secured.
- The property is presented as new but has already been legally sold, making it a secondary market unit.
- Attempts to combine the incentive with informal or “grey” ownership structures (nominees, verbal agreements). In such cases, the tax benefit offers no protection and increases legal risks.
It is important to understand that PPN DTP is not a developer discount, but a state tax mechanism. If it is applied incorrectly, the buyer ultimately bears responsibility.
The incentive is valid only in 2026, and whether it will be extended remains unknown. As a result, many transactions are being planned specifically for this period. However, rushing is not advisable. For foreign buyers, legal ownership structure, properly executed documents, and a reliable notary and developer remain far more important than tax savings. VAT can be saved — losing property rights is far more costly.
The Legal Indonesia legal team has extensive experience working with foreign clients, including full support for real estate transactions, and has deep knowledge of local regulations and risks.
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