Duty on the acquisition of land and building rights
A transfer of land and building rights will typically also give rise to Duty on the acquisition of land and building rights (Bea Pengalihan Hak atas Tanah dan Bangunan/BPHTB) liability for the party receiving or obtaining the rights. Qualifying land and building rights transfers include sale-purchase and trade-in transactions, grants, inheritances, contributions to a corporation, rights separations, buyer designation in an auction, the execution of a court decision with full legal force, business mergers, consolidations, expansions, and prize deliveries. Acquisitions of land and building rights in certain non-business transfers may be exempt from BPHTB.
BPHTB is based on the Tax Object Acquisition Value (Nilai Perolehan Objek Pajak/NPOP), which in most cases is the higher of the market (transaction) value or the NJOP of the land and building rights concerned. The tax due on a particular event is determined by applying the applicable duty rate (5%) to the relevant NPOP, minus an allowable non- taxable threshold. The non-taxable threshold amount varies by region: the maximum is IDR 60 million, except in the case of an inheritance, for which it may reach IDR 300 million. The government may change the non-taxable threshold via regulation.
BPHTB is typically due on date that the relevant deed of land and building right transfer is signed before a public notary. In a business merger, consolidation, or expansion, the duty is due on the date of signing of the merger, consolidation or expansion act. In an auction, the duty is due on the date of signing date of the Auction Report by the authorized officer.
At the request of a taxpayer, the DGT may grant a BPHTB reduction of up to 50% for land and building rights transfers in business mergers or consolidations at book value, as well as for land and building rights obtained as compensation for the release of land and building rights for a public-interest governmental project. In certain non-business land and building rights transfers, the DGT may also grant, at the request of a taxpayer, BPHTB at 25%, 50%, 75% or 100% of the duty due.
A notary is prohibited from signing a deed transferring rights until the BPHTB has been paid.