The housing sector saw 9,618 units benefit from the Value Added Tax Borne by the Government (VAT-Borne-by-Government) incentive in the first half of 2026. The facility is available to buyers of eligible landed houses and apartment units.
Statistics from the Central Statistics Agency (BPS) in its 2026 Housing Statistics report show that the use of the VAT incentive remains heavily concentrated on Java Island.
West Java recorded the largest number of beneficiaries, with 3,684 housing units, followed by Banten with 2,094 units. East Java also ranked among the provinces with a relatively high number of housing units benefiting from the VAT incentive.
Overall, the 9,618 housing units that benefited from the facility through the first half of 2026 represented only around 25.7% of the total number of beneficiaries recorded throughout 2025.
BPS said the incentive is part of the government’s efforts to help people secure adequate housing. The VAT-borne-by-government facility applies to the transfer of landed houses and apartment units.
In the previous year, 37,445 housing units benefited from the VAT-borne-by-government facility. Most beneficiaries were concentrated in three provinces on Java, which together accounted for more than 75% of the total.
West Java ranked first with 13,589 housing units, followed by Banten with 8,403 units and East Java with 7,321 units.
This composition remained largely unchanged in the first half of 2026, with West Java and Banten still recording the highest numbers of VAT incentive beneficiaries.
The high level of utilization on Java also reflects the island’s substantial construction activity and property market. As a result, government incentives for the housing sector have been absorbed more heavily in areas with relatively high property activity.
VAT-Borne-by-Government Incentive Requirements
The government extended the VAT-borne-by-government incentive for the housing sector into the 2026 fiscal year through Finance Minister Regulation (PMK) No. 90 of 2025. The policy is aimed at maintaining purchasing power while supporting activity in the housing market.
In 2025, based on the Directorate General of Taxes (DGT) 2025 Audited Financial Report, the government allocated IDR 4.42 trillion for the housing VAT incentive. Of this amount, IDR 3.80 trillion was realized, leaving approximately IDR 618.3 billion in unused funds. The budget absorption rate stood at 86.02%.
For 2026, the government allocated IDR 3.4 trillion for the VAT incentive on commercial housing. The funds are intended to support incentives for around 40,000 commercial housing units, including landed houses and apartments. This is higher than the approximately 30,000 units projected to benefit from the facility in the previous year.
Despite this, implementation of the VAT incentive still faces several challenges. The obstacles are related not only to property market conditions in certain segments, but also to administrative requirements and tax validation processes.
Under PMK 90/2025, the government covers 100% of the VAT payable on the portion of the tax base (DPP) of up to IDR 2 billion. The facility is available to end consumers purchasing landed houses or apartment units with a maximum selling price of IDR 5 billion. Properties priced above that threshold are not eligible for the VAT incentive.
Housing units benefiting from the incentive must also meet several criteria. The property must be newly built, ready for occupancy, transferred for the first time by the taxable entrepreneur (PKP) seller or developer, and must not have previously been transferred to another party.
For buyers, eligibility is based on their identity number or taxpayer identification number. Each individual may use the VAT incentive for only one property unit.
Married couples may each use the facility for one unit, provided they use different NIKs and meet all applicable requirements.
Meeting the requirements also involves more than simply making a down payment. The transaction must be documented through a deed of sale and purchase (AJB) or a fully paid sale and purchase agreement (PPJB) executed before a notary. In addition, the buyer must have physically taken possession of the property, as evidenced by a handover report (BAST).
For the 2026 fiscal year, the BAST must be prepared and signed between January 1 and December 31, 2026.
Once the handover process is completed, the developer as the PKP must issue a tax invoice in accordance with applicable regulations. The use of the Core Tax Administration System (Coretax) also requires developers to ensure that the transaction code and information on the tax facility are entered correctly.
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