VAT Facility for Home Purchase

Jakarta, Ideatax -- The government recently issued regulations regarding the criteria for houses that get VAT facilities. Through Ministry of Finance Regulation Number 60 of 2023 concerning the Limitation of Public Houses, Pondok Boro, Student and Student Dormitories, and Workers' Houses Exempted from VAT Imposition, the government regulates that the application of public houses, pondok boro, dormitories, and workers' houses can be granted a VAT exemption.

This regulation is a derivative regulation of the Value Added Tax Law and Government Regulation Number 49 Year 2022. Article 6 paragraph (2) letter j of Government Regulation Number 49 of 2022 regulates that flats, boro huts, student dormitories, and workers' houses can obtain exemption from the imposition of Value Added Tax if they meet certain criteria.

Public Houses and Workers' Houses that obtain facilities

Regulation of the Ministry of Finance Number 60 of 2023 regulates that public houses are houses built to meet the housing needs of low-income people (MBR). Meanwhile, workers' houses are houses built and financed by employers for their workers who fall into the category of low-income people.

Both public houses and workers' houses must be used solely as residential houses, not including shop houses or office houses and cannot be transferred for four years after being acquired.

Furthermore, the regulations in the Ministry of Finance Regulation Number 60 Year 2023 also regulate that public houses and workers' houses can obtain VAT exemption facilities if they have a building area of 21m2 to 36m2, a land area of 60m2 to 200m2, the selling price does not exceed the selling price set by the Ministry of Finance and is the first house owned.

The following is the limit on the selling price of public houses and workers' houses that are exempt from the imposition of VAT:

There are some additional requirements to utilize the VAT exemption facility, among others: Individual taxpayers who will utilize the VAT exemption facility must have submitted their Individual Income Tax Return for the last two years and have no tax debt.

Boro Cottage and Student Dormitories with Facilities

For information, Pondok Boro is a simple building built and financed by individuals or Labor Cooperatives or Employee Cooperatives intended for non-permanent workers or low-income informal sector workers with agreed rental fees, can be in the form of multi-storey or non-storey buildings.

On the other hand, a student dormitory is a simple building that is built and financed by the University or School, Individuals and/or Local Government specifically intended for student housing or students, can be in the form of multi-storey or non-storey buildings.

Ministry of Finance Regulation Number 60 Year 2023 regulates that the transfer of boro huts to labor cooperatives, employee cooperatives, local governments, and/or the central government, is exempt from the imposition of VAT. In addition, the regulation also regulates that the delivery of student dormitories and students to universities or schools, local governments, or the central government can also be exempted from the imposition of VAT.

To be able to obtain the VAT exemption facility, the party receiving the boro cottages and dormitories must have a tax ID. In addition, the boro cottages and dormitories are in the form of buildings with a simple classification in accordance with the regulations of laws and regulations governing buildings.

Submission of Notification of Facility Utilization

Ministry of Finance Regulation Number 60 Year 2023 regulates that in order to utilize the VAT exemption facility, taxpayers who receive the delivery of public houses, workers' houses, boro houses, and student dormitories must submit a notification through electronic channels provided by the Directorate General of Taxes.

The notification of facility utilization must be submitted electronically before delivery or before receipt of payment in the event that payment is made before delivery.

If the electronic channel cannot be accessed because the recipient/buyer does not have a tax ID, the notification of the utilization of the VAT facility shall be submitted by the seller.

Obligation to generate tax invoices

Article 13 of Ministry of Finance Regulation number 60 of 2023 regulates that sellers who hand over public houses, simple flats, student dormitories and students are required to make complete and correct tax invoices. The tax invoice at least contains information about the identity of the recipient/buyer, the payment receipt number, the house identity code, and the information "public housing ownership program from the government" in the description column.

If you experience problems or need further information, Ideatax is the solution.

Related regulations

• Law No. 8 of 1983 on Value Added Tax and Sales Tax on Luxury Goods as amended by Law No. 21 of 2021 on Harmonization of Tax Regulations

• Government Regulation Number 49 Year 2022 on Exempted Value Added Tax and Value Added Tax or Value Added Tax and Sales Tax on Luxury Goods Not Collected on Import and/or Delivery of certain Taxable Goods and/or Delivery of certain Taxable Services and/or utilization of certain Taxable Services from outside the Customs Area

• Ministry of Finance Regulation No. 60 of 2023 on the Limitation of Public Houses, Pondok Boro, Dormitories for Students and Students, and Workers' Houses that are Exempted from the Imposition of VAT