In Indonesia, individuals and property developers often attempt to optimize their tax strategy during property transactions, aiming to minimize transaction costs as much as possible. However, many of these approaches should consider the prevailing tax regulations to avoid administrative fees.
A common practice is to use a Preliminary Sale and Purchase Agreement (Perjanjian Pengikatan Jual Beli/PPJB) and a Power of Attorney to Sell (Surat Kuasa Menjual/SKM) to replace the Deed of Sale and Purchase (Akta Jual Beli/AJB), to delay the payment of Income Tax (Pajak Penghasilan/PPh) and Land and Building Acquisition Duty (Bea Perolehan Hak atas Tanah dan Bangunan/BPHTB). Some developers may suggest postponing tax payments until the land subdivision is complete or when the construction process is ready to commence.
However, such schemes are not compliant with Indonesian tax law and can result in severe administrative and criminal penalties if not addressed quickly.
Many property buyers and sellers are unsure about their tax obligations during a property transaction. It’s a common misconception that taxes are only due at the time of the AJB signing. In reality, the obligation to pay taxes, such as BPHTB for the buyer and PPh for the seller, must be fulfilled much earlier, once the PPJB is executed and payment is made.
The BPHTB is due for these reasons:
Even if the AJB has not been signed yet, if a PPJB has been made and payment received, both PPh and BPHTB are already due. Once the buyer has paid and taken possession of the property, they are responsible for paying BPHTB.
Postponing tax payments increases the compliance risk for the related parties. As digital integration between government agencies tightens, tax avoidance becomes nearly impossible. Short-term benefits from uncertain strategies can lead to higher costs and legal risks in the future.
Proper compliance and planning are always more beneficial during a property transaction. Putranto Alliance is prepared to support compliance strategy during property transactions, such as buying, selling, executing a joint venture, or partnering with investors, in accordance with prevailing regulations.
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