As Indonesia moves into 2026, the government has officially extended its stimulus package for the real estate sector. This policy, formalised under the Minister of Finance Regulation (PMK) No. 90 of 2025, provides a Government-Borne VAT (Pajak Pertambahan Nilai Ditanggung Pemerintah or PPN DTP) to help maintain momentum in the housing market and support middle-class purchasing power.
While the incentive presents a meaningful opportunity for property buyers, the technical and compliance requirements attached to the scheme are particularly important for international investors considering property purchases in Indonesia, including destinations such as Bali, Lombok, Flores, and Jakarta.
A clear understanding of how the incentive is applied in practice is essential before moving forward with a transaction.
At ILA Global Consulting, we regularly work with international clients on property-related tax and regulatory matters in Indonesia. With hands-on experience assisting foreign buyers and investors, our team focuses on ensuring transactions are structured correctly, comply with regulations, and align with the applicable incentive framework.
With a proven track record, clear communication, and a client-focused approach, ILA Global Consulting has become a trusted advisor to individuals and businesses seeking to establish a strong, sustainable presence in Indonesia.
This article outlines how the 2026 VAT property incentive works, who may benefit from it, and the requirements for applying it correctly, especially for foreign buyers interested in property in Indonesia.
How Does the 2026 VAT Property Incentive Work in Indonesia?
For the 2026 fiscal year, the Indonesian government offers a 100% VAT discount on eligible residential property purchases, subject to defined financial and legal parameters.
The incentive applies under the following conditions:
- 100% VAT Coverage
VAT is fully covered by the government on the first IDR 2 billion of the property’s selling price. - Price Ceiling
To qualify, the total property price must not exceed IDR 5 billion. - Eligible Property Types
The incentive applies only to new, ready-to-occupy (readystock) landed houses or apartment units. - Handover Period
The property handover must be documented through a Berita Acara Serah Terima (BAST) and occur between January 1, 2026, and December 31, 2026.
Example:
If you purchase a villa for IDR 3 billion, the government covers VAT on the first IDR 2 billion. You would only pay the prevailing VAT rate on the remaining IDR 1 billion.
In practice, tax incentives such as the 2026 VAT property scheme require careful attention to VAT treatment, reporting obligations, and compliance requirements.
| Term | Definition |
|---|---|
| PPN DTP (Pajak Pertambahan Nilai Ditanggung Pemerintah) |
A VAT incentive where the Indonesian government bears the VAT payable on eligible transactions, subject to specific conditions set out in the Ministry of Finance regulations. |
| VAT (Value Added Tax) |
A consumption tax imposed on the delivery of taxable goods and services in Indonesia, including certain property transactions, in accordance with prevailing tax laws. |
| BAST (Berita Acara Serah Terima) |
An official handover document confirming the physical and legal delivery of property from the seller or developer to the buyer, required for administrative and tax purposes. |
Managing VAT and Tax Compliance in Indonesia
Dealing with finances, taxes, and accounting can feel overwhelming, especially as a foreigner in Indonesia. At ILA Global Consulting, we assist clients with tax and accounting matters, including VAT assessment, tax reporting, and compliance planning, helping ensure incentives are applied correctly and risks are properly managed.
With ILA by your side, nothing can go wrong. Schedule a free consultation today or learn more about our tax and accounting services.
Does the 2026 VAT Incentive Apply to Leasehold Agreements?
A critical point of clarification for our clients in Bali and across Indonesia concerns the legal nature of the property title.
The PPN DTP incentive is intended solely for the delivery (penyerahan) of property transactions involving a transfer of ownership or high-level property rights. Typically, those associated with Hak Milik (Freehold) or Hak Guna Bangunan (HGB – Right to Build).
- Leasehold (Sewa Menyewa): Standard long-term leasehold arrangements, commonly used by foreigners for 25–30-year terms, generally do not qualify for the PPN DTP incentive. Under Indonesian tax regulations, VAT on lease agreements is treated as a service or rental tax, rather than a property “delivery” under this specific stimulus scheme.
- Freehold/HGB: The incentive is primarily intended for transactions in which the property is registered through a Sale and Purchase Deed (Akta Jual Beli, or AJB) executed before a Notary/PPAT, reflecting a formal transfer of ownership or qualifying property rights.
| Term | Definition |
|---|---|
| Hak Milik | The strongest form of land ownership right under Indonesian law, granting full ownership of land and generally restricted to Indonesian citizens. |
| Hak Guna Bangunan (HGB) | A right to construct and own buildings on land that is not owned by the holder, granted for a fixed period and extendable in accordance with Indonesian land regulations. |
| Leasehold (Sewa Menyewa) |
A contractual right to use property for a specified period based on a lease agreement. Leasehold arrangements do not constitute ownership rights under Indonesian land law. |
| Akta Jual Beli (AJB) (Sale and Purchase Deed) |
An official deed executed before a Notary or PPAT that formally records the transfer of land or property rights from the seller to the buyer under Indonesian law. |
Can Individuals and PT PMAs Claim the 2026 VAT Incentive?
Eligibility under the 2026 regulation depends on the buyer’s legal status.
Individual Buyers
The incentive is available to both Indonesian Citizens (WNI) and Foreign Citizens (WNA). However, the following conditions apply:
- Each individual may only claim the incentive for one property purchase
- Foreign buyers must hold a valid stay permit (KITAS or KITAP)
- Ownership must comply with the property ownership regulations, such as Hak Pakai or Hak Sarusun
Corporate Buyers (PT PMA)
Under current regulations, the PPN DTP is designed as a consumer-facing incentive.
Can a PT PMA use it?
Generally, no. The incentive is intended for individuals (orang pribadi) to encourage home ownership. If a PT PMA (Foreign Investment Company) purchases a property as a corporate asset for commercial purposes or staff housing, the transaction typically falls outside the scope of the residential home ownership stimulus.
Investor Tip:
If you are an investor planning to use a PT PMA, your primary tax benefits usually come from Corporate Income Tax deductions and VAT input–output crediting, rather than from the PPN DTP incentive.
| Term | Definition |
|---|---|
| KITAS (Limited Stay Permit) |
A temporary residence permit that allows foreign nationals to legally stay in Indonesia for a specific period, subject to immigration regulations. |
| KITAP (Permanent Stay Permit) |
A permanent residence permit granted to eligible foreign nationals, allowing long-term stay in Indonesia under certain conditions. |
| Hak Pakai | A right to use land or property under Indonesian law, commonly applied to foreign individuals purchasing residential property. |
| Hak Sarusun | A strata title ownership right applicable to apartment units. Granting ownership of an individual unit along with shared rights over common areas. |
What Are the Compliance Requirements to Secure the VAT Incentive?
To ensure the VAT discount is not revoked by the Indonesian tax authority (DJP), buyers must comply with several administrative requirements:
- VAT Invoice (Faktur Pajak)
The developer must issue a VAT invoice using the correct transaction code (07). - BAST Registration
The property handover report must be registered through the Ministry of Public Works and Housing (PUPR) or the BP Tapera system. - No Resale Requirement
The property cannot be sold or transferred to another party within one year of purchase.
For individual buyers looking to take advantage of the 2026 VAT incentive, as well as corporate investors structuring a property acquisition in Indonesia, careful attention to eligibility and compliance requirements is essential.
If you want to confirm whether your planned property purchase qualifies under the PPN DTP scheme, we can assist in reviewing the structure and requirements before you proceed.
