Want to Build Your Own Home? Get ready to be taxed, this is the cost

Jakarta, CNBC Indonesia – The government has set a tariff for the application of Value Added Tax (VAT) on Self-Building Activities (KMS). That way, people who will build their own houses will be subject to VAT.

However, the tax only applies to houses that have a building area of ​​at least 200 square meters. This rule is regulated in PMK Number 61/PMK.03/2022 concerning Value Added Tax (VAT) on Own Activities and is effective from April 1, 2022.

“So the activity of building a permanent residence with an area of ​​at least 200 m2 is subject to VAT 2.2% of the total cost. Building your own means building without using contractors who collect VAT,” said Special Staff to the Minister of Finance Yustinus Prastowo on his Twitter account.

The Head of the Sub-Directorate of VAT for Trade, Services and Other Indirect Taxes of the DGT, Bonarsius Sipayung explained that the calculation of tax imposition is 20% times the VAT rate of 11%, multiplied by the Basic Tax Imposition (DPP) or 2.2% of the DPP.

DPP PPN KMS is in the form of a certain value equal to the total costs incurred and/or paid in constructing the building for each tax period until the building is completed, excluding land acquisition costs.

“For example, the cost of building is Rp. 1 billion, it means that the DPP is Rp. 200 million. So if you make the effective rate, it is 11% x 20% x total cost. That means about 2.2% x Rp. 1 billion (Rp. 22 million). That’s VAT owed for building activities themselves,” explained Bonarsius.

Furthermore, according to Bonar, the VAT fee must be paid by the perpetrators who carry out KMS themselves, which are then deposited through the bank.

“This is considered to have been reported when making the Tax Payment Letter (SSP) and will enter the DGT with the State Revenue Transaction Number (NTPN) listed in the SSP. So this (regulation) has also been owed, currently it is only an adjustment,” he said.

[Gambas:Video CNBC]