Indonesia’s government will cut the home sales tax by 50 percent to boost the property market.
Home sellers in Indonesia will face lower taxes from September, after a presidential regulation slashed the home sales tax by 50 percent in a bid to boost the country’s property sector, reported Reuters.
The regulation signed by President Joko Widodo on 8 August showed that the taxes payable by sellers of homes within the country will be slashed from five percent to 2.5 percent of the transaction price.
To protect low income citizens, the rate will be pegged at just one percent for acquisitions of homes smaller than 36 sq m.
According to Ken Dwijugiasteadi, Head of Indonesia’s tax office, the measure is meant to support “the property sector and to help aid purchasing power because one of the people’s primary need is to own a house”.
Trimegah Securities said the new regulation would benefit property companies such as PT Intiland Development Tbk and PT Modernland Realty Tbk.
It noted that the regulation will not only lead to better net margins for these companies, but will also “offset high interest cost, which ultimately leads to heightened dividend payment ability”.
Residential sales in Indonesia climbed by 4.02 percent in Q2, up from the 1.51 percent increase recorded during the previous quarter, revealed a survey by Bank Indonesia.
To spur growth in the property sector, the central bank announced in June that it would relax downpayment requirements for property lending in August. Government officials have revealed that regulations supporting the changes would be unveiled soon.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
