Conditional Sale and Purchase Agreement (“CSPA”) is basically an agreement to buy the property (e.g. land, house, apartment unit, etc), wherethe seller promises to sell the property to the buyer, and the buyer promises to buy the propertyfrom the seller, subject to the fulfillment of certain requirements. Since the CSPA is a form of agreement, the CSPA is subject to the requirements as stated in Article 1320 Indonesian Civil Code (“Civil Code”).
Under Article 1320 Civil Code, the condition for an agreement to be valid is separated in 2 (two) clauses, there are subjective clause and objective clause. Subjective clause consists of:
- There must be agreement by the parties;
- There must be capacity to close the agreement.
Objective clause consistsof:
- There must be a spesific object;
- There must be an admissible cause.
Furthermore, under Article 1334 of Civil Code, it is stated that “Future matters may be the subject of an agreement”. Accordingly, the CSPA itself does not violate the objective clause in an agreement.
CSPA for sale and purchase of an apartment is stipulated in The Decision of The State Minister of Public Housing Number 11/KPTS of 1994 on The Guidelines of Conditional Sale and Purchase of the Condominum (“Kepmenpera No.11/1994”).
Under Kepmenpera No.11/1994, the buyer cannot assign the rights of the apartment to the third party without written approval from the seller.
In order to conduct the assignment of CSPA, the parties have to fulfill the requirements as stipulated in the CSPA itself. After all the requirements have been fulfilled, the parties may assign the CSPA. On the assignment of CSPA, Income Tax (“PPh”) of 5% (five percent) shall apply on the gross income from the transfer of rights of land and building, as stipulated in Article 4 paragraph (1) of Government Regulation of Republic Indonesia Number 71 of 2008 on The Third Amendment of Government Regulation Number 48 of 1994 on The Payment of Income Tax on the Income from the Transfer of Rights of Land and/or Building.
Sony El Mars