Background
On 10 June 2019, the Government of Republic of Indonesia enacted the Minister of Finance Regulation No. 86/PMK.010/2019 on the Amendment of Minister of Finance Regulation No. 35/PMK.010/2017 on the Types of Taxable Goods Classified as Luxurious Other than Vehicles Subject to Sales Tax on Luxury Goods (“PMK No. 86/2019”).
The Amendment
The PMK No. 86/2019 amends the Annex I of PMK No. 35/PMK.010/2017, which sets off the list of taxable goods other than vehicles which subject to sales tax on luxury goods in the amount of 20%. The list of goods that is amended by PMK 86/2019 is the luxury residences, e.g., luxury house, apartment, condominium, town house, and its kind with the sale price of Rp 30.000.000.00,00 (thirty billion Rupiah) or more. On the other word, the aforementioned luxury residences with the sale price below Rp30,000,000,000 shall not subject to the Sales Tax on Luxury Goods.
Comparing to the previous provision under the PMK No. 35/PMK.010/2017, the provision of PMK No. 86/2019 shows leniency towards the Sales Tax on Luxury Goods. The prior regulation set forth the value limitation of luxury residences such as a luxury house, apartment, condominium, town house, and its kind as described below:
- House and town house that are non-strata title with the sale price of Rp 20,000,000,000 (twenty billion Rupiah) or more;
- Apartment, condominium, and town house that are strata title with the sales price of Rp 10,000,000,000 (ten billion Rupiah) or more.
The preamble of PMK No. 86/2019 explains that the leniency of the provisions is intended to stimulate the growth on real estate sectors through increasing the real estate competitiveness and the investment within real estate sector. Besides change of the limit of sale price for luxury residences, the PMK No. 86/2019 also does not distinguish the classification luxury residences based on the types of non-strata title and strata title.
Hesa Adrian Kaswanda
