Indonesia Extends Its 100 Percent Housing VAT Waiver Into 2027

Indonesia will carry its government-borne housing VAT incentive into 2027, covering 100 percent of the VAT on the first Rp2 billion of a new home's price. Coordinating Minister for Economic Affairs Airlangga Hartarto announced the continuation on 1 October 2026, following a limited meeting with President Prabowo Subianto at the Presidential Palace in Central Jakarta on 30 September.

What it means for a foreign buyer

The incentive is open to foreign nationals, not just Indonesians. Under the current rules a buyer qualifies with an Indonesian tax number, an NPWP, and compliance with the separate rules governing what foreigners may own. In practice that means a foreign buyer holding a Hak Pakai apartment unit or landed house bought new from a developer can have the VAT on the first Rp2 billion of the purchase price paid by the state, provided the total price does not exceed Rp5 billion. On a unit priced at Rp2 billion the waiver covers the entire VAT charge. Above that, the buyer pays VAT only on the slice above Rp2 billion, and a unit priced over Rp5 billion gets nothing at all.

The timing matters more than the extension. The scheme now running is authorised only through the December 2026 tax period, and the claim is tied to the handover, not the contract. The developer must register the BAST, the handover deed, in the relevant ministry application by the end of the month following handover. A foreign buyer signing now on a unit scheduled to complete in the first half of 2027 sits in the gap: the 2026 regulation will have lapsed and the 2027 replacement has not been issued. Nothing is claimable until it is.

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Ask the developer in writing whether your handover falls inside the current window, and if it does not, do not let the purchase be priced as though the waiver is guaranteed.

What changed

Airlangga said the housing component of the 2027 incentive package will keep the same shape as the 2026 version: 100 percent of VAT borne by the state on the portion of the selling price up to Rp2 billion, for properties priced at no more than Rp5 billion in total.

The wider package also expands the government-borne income tax relief, PPh 21 DTP, from the five sectors it currently covers, footwear, textiles, furniture, leather and tourism, to all sectors for workers earning below Rp10 million a month. The government put the reach of that expansion at roughly 7.5 million workers. No budget figure was attached to either component at the announcement.

For the housing element the key conditions carried over from the current scheme are unchanged in the announcement: one unit per individual, the property must be new and handed over for the first time by the developer, and a buyer who used the 2023 to 2025 version of the incentive may still claim on a different unit.

The mechanism

The scheme now in force is Peraturan Menteri Keuangan Nomor 90 Tahun 2025, PMK 90/2025. Pasal 7 sets the state's share at 100 percent of the VAT on the portion of the selling price up to Rp2 billion, and Pasal 7 ayat (2) confines the relief to the tax periods from January 2026 to December 2026. Pasal 5 ayat (1) restricts it to one landed house or one apartment unit for each individual. Pasal 3 carries the registration duty, requiring the BAST to be lodged in the relevant ministry's application no later than the end of the month after handover. The seller must be a registered VAT-collecting developer and issue a tax invoice under code 07.

What was announced on 1 October is a political direction, not an instrument. A new Finance Ministry regulation has to be issued to run the scheme across 2027, and until it is published the terms described, including the Rp2 billion cap, are a statement of intent. That is the practical risk in the announcement: the figures could move in drafting, and buyers have no gazetted text to point to.

Context

Indonesia has run some form of this waiver since 2023, repeatedly renewing it in annual instalments and occasionally splitting the year into a 100 percent half and a reduced half. That pattern is what makes the gap between regulations a recurring trap rather than a one-off. Foreign buyers reach the primary market through Hak Pakai, a right-of-use title with its own regional minimum price floors, or through a PT PMA company structure, and only the first-handover purchase from a VAT-registered developer sits inside the waiver at all. A resale unit, however new, does not.

The incentive also sits alongside the subsidised-mortgage push the government ran through the Danantara housing programme earlier this year, aimed at the same primary-market inventory.

Sources

- CNN Indonesia: Insentif Bebas PPN Beli Rumah hingga Rp2 M Diperpanjang hingga 2027

- Ortax: Paket Insentif Pajak 2027, PPN DTP Rumah Tetap Berlanjut

- RRI: Insentif PPN DTP Pembelian Rumah Dilanjutkan di Tahun 2027

- DDTC News: Insentif PPN DTP Rumah Hanya Berlaku untuk Tiap 1 Orang Pribadi

- PPN Ditanggung Pemerintah atas Penyerahan Rumah Tahun Anggaran 2026 (PMK 90/2025)

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