27-8-2024 (JAKARTA) The Indonesian government has announced plans to reinstate a full tax break on property purchases for the latter half of 2024, in a move aimed at bolstering demand in the country’s real estate sector. This decision, revealed by Chief Economic Minister Airlangga Hartarto on Tuesday, marks a significant shift in policy designed to reinvigorate the housing market and support middle-class consumers.
Under the revived scheme, the government will fully cover the value-added tax (VAT) on eligible property purchases valued up to 5 billion rupiah (approximately £258,000). This tax relief applies to both landed houses and apartments, with the government absorbing the VAT on up to 2 billion rupiah of the purchase price.
The announcement comes as a welcome development for potential homebuyers and the property sector alike. Previously, the full tax break had been phased out in June, with the government subsequently offering only a 50% rebate on the VAT component until the end of the current year.
Minister Hartarto explained the rationale behind this policy reversal, citing concerns over the declining purchasing power of Indonesia’s middle class. “We recognise that the lingering effects of the COVID-19 pandemic continue to impact our citizens’ financial capabilities,” he stated. “This measure is designed to provide tangible support to those looking to invest in property, which remains a key aspiration for many Indonesian families.”
