Indonesia has revised its tax system on luxury properties according to a new ministerial decree.
Luxury tax for properties in Indonesia is now ‘Value based’ rather than the old practice of ‘Size based’.
New rule – A 20 billion rupiah residential property is subjected to 20% luxury tax.
Previous rule – Apartment and houses above 350 square metres (3,770 sq ft) is subject to 20% luxury tax.
The luxury tax is applicable to apartments priced at 10 billion rupiah or more, as opposed to the earlier threshold of 150 square metres minimum size.
Argument for rule change
The plan to change the threshold for luxury tax on properties were discussed and reviewed for months prior to its introduction last week.
Bambang Brodjonegoro, Indonesia’s Finance Minister had repeatedly said the old rule was unfair because it left small but expensive apartments in the middle of Jakarta untaxed.