Land and building tax (Pajak Bumi dan Bangunan/PBB) is a type of property tax chargeable on all land and/or buildings, unless exempted. The negative list setting out land and buildings not subject to PBB includes those:

•  Used simply for public interest in the areas of religious and social affairs, health, education and national culture, and not for the purpose of making a profit;
• Used as a cemetery, ancient heritage site or similar;
• Constituting protected forests, natural reserve forests, tourism forests, national parks, grazing land controlled by a village, and state land with no right imposed on it;
• Used by a diplomatic representative, based on the reciprocal treatment principle;
• Used by an agency or representative of an international organization, as determined by the MoF.

PBB rate is specifed at 0.5%. The actual tax due on a particular object is calculated by applying the tax rate to the

taxable sale value (Nilai Jual Kena Pajak/NJKP) of the object. NJKP is a predetermined proportion of the sale value of the

tax object (Nilai Jual Objek Pajak/NJOP) of a particular land and building. NJKP is currently stipulated to be either 20% (for NJOP up to Rp. 1 billion) or 40% (for NJOP above Rp. 1 billion). The government can increase the NJKP rate by up to 100. of the NJOP. As a result, the effective PBB at present is either 0.1% or 0.2% of the NJOP.

NJOPs are to be determined by the DGT on behalf of the MoF and may be updated every one to three years depending

on the economic development of the region in question. In accordance with MoF guidelines, NJOPs should take into account the market value of the land and building in the region. Where a piece of land and building is used for business purposes in the areas of plantation, forestry, mining, or breeding, the NJOP should also take into account the investment standard applicable on these.

PBB is payable annually following an official assessment issued by the DGT. The assessment process is typically initiated by the DGT submitting a Tax Object Notification Form (Surat Pemberitahuan Objek Pajak/SPOP) to the taxpayer in question.

The form must be filled out by the taxpayer and returned to the DGT within 30 days. Using the completed SPOP and taking into account the NJOP-related information, the DGT issues a Tax Due Notification Letter (Surat Pemberitahuan Pajak  Terhutang/SPPT), presenting the official tax assessment made by the DGT. The taxpayer in question is required to pay the tax due within six months of receipt of the SPPT.

Incorrectly filing in a SPOP, late fling of the completed SPOP, or ignoring the SPOP can expose a taxpayer to a potential penalty of 25% of the PBB due.

An individual or an organization that owns a right to a piece of land, and/or takes benefits there from, and/or owns, controls, and/or takes benefits from a building can by law be regarded as the PBB taxpayer for that piece of land and/or building. Each taxpayer is entitled to a non-taxable NJOP, which at present set at Rp.24, 000,000. The MoF is authorized by law to make adjustments to the non-taxable NJOP.