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Jakarta, Ideatax -- The Coordinating Minister for Economic Affairs, Airlangga Hartanto, stated that the government will soon provide fiscal incentives in the form of a government-borne VAT on the purchase of houses with a nominal value of two billion rupiah. Furthermore, in a press release number HM.4.6/411/SET.M.EKON.3/10/2023, the Coordinating Ministry for Economic Affairs also stated that the fiscal incentive will take effect from November 2023 to December 2024. The amount of Government Borne VAT (DTP) on property purchases is 100% for the period November to June 2024 and 50% for the period July 2024 to December 2024.
Also Read: From Income Tax to VAT, These Are the Tax Aspects You Must Understand
On another occasion, the Minister of Finance, Sri Mulyani Indrawati, stated that the VAT DTP incentive on property purchases applies to the purchase of new houses with a value below two billion. Furthermore, the Minister of Finance said that the VAT DTP facility applies to the purchase of one house per one NIK or NPWP (Rachman, 2023). This means that this facility does not apply to the purchase of a second house with the same NIK or NPWP.
Learn From History
Looking at its history, the government has provided VAT facilities on property purchases several times, especially during covid-19. In 2021, for example, the government provided VAT DTP facilities for the purchase of landed houses and flats with a maximum value of five billion rupiah. Through Minister of Finance Regulation Number 21 of 2021, the government provides government-borne VAT facilities of 50% to 100%. For the purchase of flats and landed houses with a maximum value of two billion rupiah, buyers will get a VAT DTP facility of 100%. Meanwhile, for the purchase of flats or landed houses with a value of two to five billion rupiah, the government provides a VAT DTP facility of 50%.
This policy is likely to boost property sales in 2021. Indonesia Properti Watch states that in the third quarter of 2020, the value of property sales experienced a sharp decline compared to the previous quarter (Lubis, 2021). This is due to a decrease in demand for the slowdown in property sales which continued the following year. Where during the fourth quarter of 2020 to the first quarter of 2021, there was stagnation in property sales.
In the second quarter of 2021, or shortly after the VAT DTP policy was issued, property sales experienced a sharp increase. In fact, this upward trend in property sales continued in 2022.
Improving The Effectiveness of Policies
To repeat the success of the previous year, in 2023 the government again provided fiscal incentives in the form of VAT DTP on property sales. But keep in mind that the conditions in 2021 and 2023 are certainly very different. At this time, economic conditions are much better. Economic growth in the second quarter of 2023 has reached 5.17% (BPS, 2023). Meanwhile, economic growth in 2021 was 3.69% (Kominfo, 2022). Thus, applying the same policy to different conditions is certainly not appropriate.
We have to appreciate the government's efforts to increase people's purchasing power by providing fiscal incentives in the form of VAT DTP on property purchases. However, to improve the effectiveness of the policy implementation, there are several things that can be taken.
First, as it is known, VAT is a tax on consumption that is neutral. This means that the same goods are subject to the same VAT, regardless of the social status of the buyer. Thus, the provision of VAT DTP facilities on house purchases will more or less reduce the neutrality of VAT. To reduce the impact of VAT neutrality, the government can take the option to provide VAT incentives gradually. For example, for home purchases with a value of up to one billion, the incentive provided is 100%. Then, for home purchases with a price of one to two billion, the incentive provided is 50%.
Second, because the VAT incentive system is borne by the government, not exempted or not collected, the government will replace the amount of VAT that should be paid by consumers with the APBN mechanism. However, in some cases, the payment by the state budget does not go smoothly, thus disrupting the cash flow of the seller. As a result, sellers are reluctant to utilize the VAT DTP incentive. Therefore, the government must clarify the mechanism for providing VAT DTP on home sales. So that sellers get certainty about the terms and mechanisms of the DTP.
Third, if the main purpose of providing incentives is to stimulate the property sector, the government needs to expand the definition of incentives to other property activities such as renovation and self-build activities. The expansion of the definition will not only provide a multiplier effect in the form of increased demand for the property sector, but will also provide a sense of fairness on a level playing field.
Those are suggestions and feedback to the government. Hopefully, in the near future, derivative regulations governing the provision of VAT DTP on house purchases can be issued in a fair manner.
References
BPS. (2023, Agustus 07). Ekonomi Indonesia Triwulan II-2023 Tumbuh 5,17 Persen (y-on-y). Retrieved from BPS: https://www.bps.go.id/pressrelease/2023/08/07/1999/ekonomi-indonesia-triwulan-ii-2023-tumbuh-5-17-persen--y-on-y-.html
Kemenko Perekonomian. (2023, October 28). Pelemahan Ekonomi Dunia Berdampak pada Sektor Properti, Pemerintah Siapkan Insentif PPN DTP (Ditanggung Pemerintah) dan Bantuan Biaya Administrasi Bagi MBR (Masyarakat Berpenghasilan Rendah). Retrieved from Kemenko Perekonomian RI: https://www.ekon.go.id/publikasi/detail/5440/pelemahan-ekonomi-dunia-berdampak-pada-sektor-properti-pemerintah-siapkan-insentif-ppn-dtp-ditanggung-pemerintah-dan-bantuan-biaya-administrasi-bagi-mbr-masyarakat-berpenghasilan-rendah
Kominfo. (2022, Februari 02). BPS Catat Ekonomi Indonesia Tumbuh 3,69 Persen Pada 2021. Retrieved from Kominfo: https://www.kominfo.go.id/content/detail/39835/bps-catat-ekonomi-indonesia-tumbuh-369-persen-pada-2021/0/berita#:~:text=Jakarta%20Pusat%2C%20Kominfo%20%2D%20Badan%20Pusat,mengalami%20kontraksi%202%2C07%20persen.
Lubis, M. S. (2021, November 19). Nilai Penjualan Rumah Sepanjang 2021 Terus Meningkat. Retrieved from Bisnis Indonesia: https://ekonomi.bisnis.com/read/20211119/47/1468200/nilai-penjualan-rumah-sepanjang-2021-terus-meningkat
Rachman, A. (2023, November 03). Resmi! Beli Rumah Gratis PPN 100% Berlaku Mulai Bulan Ini. Retrieved from CNBC: https://www.cnbcindonesia.com/news/20231103104922-4-486101/resmi-beli-rumah-gratis-ppn-100-berlaku-mulai-bulan-ini
