Indonesia Reinstates Full Tax Break for Property Purchases until December
In a move to boost demand in the property market, the Indonesian government has announced the reinstatement of a full tax break on property purchases worth up to five billion rupiah (S$420,454) for the second half of 2024. This policy change, effective until December, aims to support the purchasing power of the middle class, which has been declining due to the ongoing effects of the Covid-19 pandemic.
How the Policy Works
Under this policy, the government will cover the cost of value-added tax (VAT) on up to two billion rupiah of the price of an eligible landed house or apartment purchase. This means that buyers of properties within the specified price range will not have to pay VAT, providing a significant incentive for those looking to invest in the property market.
Background of the Policy
The policy of covering 100% of the VAT component had initially ended in June, and the government had been rebating 50% of the tax until the end of the year. However, with the reinstatement of the full tax break, the government hopes to stimulate demand and support the middle class, which has been disproportionately affected by the pandemic.
Supporting the Middle Class
According to Chief Economic Minister Airlangga Hartarto, the policy change is designed to support the purchasing power of the middle class, which has been declining due to the ongoing effects of the Covid-19 pandemic. By providing a full tax break on property purchases, the government aims to encourage more people to invest in the property market, thereby boosting demand and supporting economic growth.
Impact on the Property Market
The reinstatement of the full tax break is expected to have a positive impact on the property market, with more people likely to invest in properties within the specified price range. This could lead to an increase in property sales, which in turn could stimulate economic growth and support the country's recovery from the pandemic.
