Real Estate Law – Income Tax from Transfer and Conditional Sales and Purchase Agreement of Land and/or Building

real-estate-law-leks&coTo accelerate the implementation of development program, government later issued Government Regulation Number 34 of 2016 on Income Tax on Income from Transfer of Land and/or Building Right, and Conditional Sales and Purchase of Land and/or Building Agreement including its Amendment (“GR No. 34/2016”) which has been issued and promulgated on 8 August 2016. GR No. 34/2016 revokes Government Regulation Number 48 of 1994 on Income Tax Payment on Income from Transfer of Land and/or Building Right including its Amendment. Nevertheless, this regulation does not revoke its implementing regulations as long as it does not violate GR No. 34/2016.

Types of Transaction

Income received from transactions mentioned below will be granted with payable final income tax (“PPh”):

  • transfer of land and/or building right, or
  • conditional sales and purchase agreement of land and/or building including its amendment (“CSPA”).

The income received from the transfer of land and/or building right is the income received or obtained from a party who transfers the land and/or building right through sales, exchange, relinquishment of right, handover of right, auction, grant, inheritance, or other acceptable methods.

The income from CSPA is the income came from (i) seller’s party who has their name written on CSPA before the amendment was signed for the first time, or (ii) buyer who has their name on CSPA before the amendment or addendum of CSPA for the change of buyer’s party.

Tariff of PPh

The tariff of PPh from transfer of land and/or building right are:

  • 2,5% from total gross value from transfer of land and/or building right except for transfer of right of land and/or building in the form of public house and public condominium done by taxpayer with their main activities is to transfer right of land and/or building;
  • 1% from total gross value from transfer of right of land and/or building of public house and public condominium for taxpayer with their main activities is to transfer right of land and/or building; or
  • 0% on transfer of right of land and/or building to government, state-owned entity receiving special appointment from government, or district-owned entity receiving special appointment from head of region in accordance with land procurement on construction for public interest regulation.

PPh tariff stated above is also applicable for income from CSPA calculated based on its total gross value provided that:




  • if the transfer of right of land and/or building is made by transfer without the influence of special relation, then will be counted with a value as actually received or obtained; or
  • if the transfer of right of land and/or building right is made by transfer influenced with special relation, then it is counted according to a value that should have been received or obtained.

PPh Payment

PPh is directly paid by individual or institution who receives or obtains income from transfer of right of land and/or building to bank/receiving post before the signing of deed, decision, agreement or auction minutes by the official authorities. The signing of deed, decision,  agreement or auction minutes will be made once the official has received the copy of tax payment slip as proof or other administration copy that has been considered equivalent to the tax payment slip examined by tax office.

Otherwise, for individual or institution with the main activities to transfer right of land and/or building, PPh will be payable once the payment has been received partly or wholly on transfer of land and/or building right and should be paid by such individual or institution to bank/receiving post at the latest of 15 (fifteen) months after the month of payment. PPh will be calculated from the total of every payment including down payment, interest, collection, and other additional payment paid by the buyer. Authorized official signing the deed, decision, agreement, or auction minutes shall submit monthly report regarding the issuance of the deed, decision, agreement, or auction minutes of transfer of land and/or building right to directorate general of tax.

Official mentioned above are land conveyancing officer, auction official, or other authorized officials. If official authority does not fulfill the requirement of signing and/or submission of annual report, then such official will be penalized according to the applicable regulations.

Individuals or institution who obtains income from transfer of right of land and/or building through sale and purchase or exchange to government will be charged with PPh by government treasury or official who does the payment or official who issues the exchange. Such government treasury or official will be obligated to pay PPh to bank/receiving post before paying individual or institutions who has the right to receive or before the exchange is performed. Payment will use tax payment slip or other administration copy under the name of individual or institution who receive the payment or performing the exchange.

PPh Fulfillment

The fulfillment of PPh with regards to the amendment of CSPA has to be made by the buyer by paying the tax on their own before the amendment of CSPA is made. Seller will only sign the amendment of CSPA once the buyer has submitted a copy of tax payment slip proof or other administration copy equivalent to the tax payment slip. Seller is obliged to submit the amendment of CSPA report to the Directorate General of Tax. If the seller does not obey the regulation on signing and/or does not submit the amendment report to Tax Office, then Seller will be penalized in accordance with applicable regulation.

Exemption from Payment or Charges of PPh

Exempted from payment or charges of PPh obligation of income deriving from transfer of right of land and/or building or CSPA:

  1. individual with salary below non-taxable income for the transfer of right of land and/or building with total gross of transfer less than Rp. 60,000,000 (sixty million Rupiah) and not a divided amount;
  2. individual or institution who performs transfer of asset in the form of land and/or building by granting to straight blood-related family, religious institution, educational institution, social institution including foundation, cooperatives or person who performs micro and small business, as long as the grant is not related to business, work, ownership, or authorization among respective parties;
  3. transfer of right in the form of land and/or building through inheritance;
  4. institution performing transfer of asset in the form of land and/or building in the event of business merger, consolidation, or expansion that has been stated by Financial Minister to use book value;
  5. individual or institution performing transfer of asset in the form of building to perform build-operate-transfer, build-transfer-operate, or utilizing Stated owned asset in the form of land and/or building; or
  6. individual or institution not included as tax subject who performs transfer of asset in the form of land and/or building.

Ministry of Agraria and Spatial Layout/Head of National Land Agency Authority

Ministry of Agrarian and Spatial Layout/Head of National Land Agency (“Ministry”) can only issue letter of granting of right, recognition of right, and transfer of right of land if the application was accompanied by tax payment slip or other administration copy equivalent to the tax payment slip. As for the transfer of right of land and/or building exempted from tax charge, the documents should be completed with exemption certificate issued by Directorate General of Tax.

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Real Estate Law – Income Tax from Transfer and Conditional Sales and Purchase Agreement of Land and/or Building
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