Yearly tax on land, lease and building

Mark

Markit wroteSent you a pm...?

Got it, reply received?

Markit

DenpasarHouse wrote I don't wish anyone who has used the nominee system ill will (you were most likely given poor advice by greedy agents and Notaris') but there shouldn't be any confusion. It's 100%, unambiguously illegal, and it always has been.

Care to show one (1) piece of judicial proof for this assertion?

Mark

Markit wroteThank you for your clear and considered reply and I will need a bit to digest the part about tax amnesty. In reference to the land tax you said: This seems to be an awful lot in consideration of Mark's 0.1% above!!! [FONT=verdana] [/FONT][FONT=verdana][SIZE=2][COLOR=#C0504D]On its face, this statement seems in order. This 10 are of land has an NJOP value of Rp 36 juta, and attracts an annual land tax of 0.1% or Rp. 36K. Since the tax wasn’t paid when it was due (30 Sept), there is a fine (denda) of Rp 720. Assume you have a similar bill for the second 10 are piece?[/COLOR][/SIZE][/FONT] I'm not clear where the land value sum of 36 juta comes from? I paid 36 juta tax please see receipt!

The 36 juta value is the government's assessed value of the land, not necessarily its market value. You could imagine the uproar if all land was taxed at market value - few Balinese could afford to pay. In any event, according to the receipt you paid Rp.36,750 tax (jumlah bayar), so I'm confused why you say you paid 36 juta tax...

DenpasarHouse

Markit wrote . . . there are several that say the nominee agreement is legal... or at lease not illegal.

Feel free to show your sources, that's not something I've ever seen referenced.

Markit

DenpasarHouse wroteFeel free to show your sources, that's not something I've ever seen referenced.

Bali News: Actor Handed Losing Script

Mark

Markit wroteI'm afraid I'm one of those Emu's that thought if he kept his head in the sand it would all go away. It hasn't surprise, surprise and I would appreciate any advise this illustrious forum can give me in my moment of need. I built on this land 7 years ago and pain(d) no tax on anything until last year when it was all settled. Where upon my nominee says he got this receipt: [ATTACH=CONFIG]2832[/ATTACH] This seems to be an awful lot in consideration of Mark's 0.1% above!!! [FONT=verdana] [/FONT][FONT=verdana][SIZE=2][COLOR=#C0504D]On its face, this statement seems in order. This 10 are of land has an NJOP value of Rp 36 juta, and attracts an annual land tax of 0.1% or Rp. 36K. Since the tax wasn’t paid when it was due (30 Sept), there is a fine (denda) of Rp 720. Assume you have a similar bill for the second 10 are piece?[/COLOR][/SIZE][/FONT] All good and well but my real estate lady then came along with this reply: [COLOR=#1f497d][FONT=&amp] [I]I note the tax is for land only and no building so the tax was not mutated to cover land and build. You will need to get that checked as when construction was completed then construction tax should have been paid and a mutation on the PBB[/I] To which I (and my nominee?) seem to be in the dark. Any advise or ideas? [/FONT][/COLOR] [COLOR=#1f497d][FONT=&amp] [FONT=verdana][SIZE=2][COLOR=#C0504D]The real estate lady is right. Since you have now added a building to the property, you will need a mutasi (modification) to the tax records as the value of the property (and corresponding annual property tax) will have increased due to the building. This is a routine matter that can be sorted out at the tax office and should be done prior to the sale. Indeed your buyer will probably insist on it so better to just get it handled to avoid delaying the sale process.[/COLOR][/SIZE][/FONT] Further to my situation; my nominee's tax advisor has now said I need to pay the 3% amnesty tax before December but my understanding of this tax was similar to what has been stated above i.e. if the land/house was within the bounds of possible ownership from my nominee (he's a GM for a major hotel and not just some driver or pool boy) then there should really be no question of it's "rightness"? [/FONT][/COLOR][FONT=verdana][SIZE=2] [/SIZE][/FONT][COLOR=#1f497d][FONT=&amp][FONT=verdana][SIZE=2][COLOR=#C0504D]This issue is a bit more tricky, as it has to do with your nominee's tax situation, and not the land per se. According to the tax records, your nominee owns a piece of land (or two) in Karangasem and the authorities may want to know at some point where the money came from for this purchase and whether the nominee ever paid tax on this money. If he did not (and of course he did not), then the tax amnesty payment cleans the matter with no further enquiry. Yes, the money to purchase the land was yours, but in effect you gave it to him to purchase the land in his name. In the eyes of the taxman, this is a gift that is taxable to the recipient. The amnesty payment makes the resulting liability go away.[/COLOR][/SIZE][/FONT] It was pointed out by the accountant that this is because I'm trying to sell - and that there would be a conflict should the sale happen (which I doubt)?? [/FONT][/COLOR] [COLOR=#1f497d][FONT=&amp] [FONT=verdana][SIZE=2][COLOR=#C0504D]Your doubt seems well founded. As it is a personal tax matter, I believe the only way this issue could hold up the sale is if your nominee refuses to sign the sale and purchase agreement unless you pay the amnesty amount.[/COLOR][/SIZE][/FONT] Any clarity would be gladly embraced or alternatively a source (paid) of VALID information/advice - there are sooooo sooo many conflicting stories on this subject and the beating of vulture wings is very loud. Markit [/FONT][/COLOR]

davita

According to our notary....using our funds to buy the property is not a gift as the deed (Akta Pernyataan) says it has to be returned. Our nominees own their own houses and certainly didn't need my money to purchase. Also, the funds didn't enter their accounts...it went thru' Notary escrow direct to the sellers. IMO we WNA sometimes dig too deep into the way things are done in Indonesia and don't help ourselves. I don't know anyone that has been deprived of property simply by action of authorities...it's always by some dispute between individuals who then use the system for nefarious purpose. But all this falls into the OP's post also...the amnesty rule was not intended for this situation and is therefore often misconstrued...as has been said by Mark and DPH. I know many people think that declaring amnesty, and paying the fee, makes it all go away and are happy to comply. That's why we took advise and, as we haven't done anything wrong, we don't need amnesty. We'll need to wait and see if the taxmen start going after foreigners who only want to live to live peaceably in Indonesia and have to modify their lifestyle because the RI property ownership law is so archaic and xenophobic. IMO....they have bigger fish to fry.

DenpasarHouse

davita wrote . . . as we haven't done anything wrong . . .

I'm being a real stickler here, but if you're a foreigner and you've used the nominee system to control/own Indonesian land then, by Indonesian law, you and your nominees absolutely have done something wrong. I personally think you've been given poor advice and that your nominees should've used the Tax Amnesty (paid for by you, of course) to legitimise their ownership of your properties. If they ever get audited by the Tax Department they (i.e. you) could be forced to pay the top rate of 30% and your nominees could be charged with Tax Evasion. I wonder if all the nominees out there realise that? Whether you'll ever actually be prosecuted and lose your house and land is a different matter. The only advice I'd give people is that Indonesia is slowly, but surely, getting it's act together. What are the odds that you'll be able to get away with it forever? I don't wish anyone who has used the nominee system ill will (you were most likely given poor advice by greedy agents and Notaris') but there shouldn't be any confusion. It's 100%, unambiguously illegal, and it always has been.

davita

Re: post #25 Not this old potato again...has been argued so many times. There is no such thing as a nominee system...it is a phrase conjured by some realtor years ago. I have the Sertipikat Tanda Bukti Hak (Title Deeds) and Akta Jual Beli (Bill of Sale) on my desk here and it only has my nephew/wife names on those documents. Therefore he [B]IS[/B] the owner and his wife inherits if he dies. It's the same with the villa he also owns and lives in...no difference. He reports both properties, plus another in Jakarta he inherited from his grandmother, and two cars, and maybe his bike, on his annual SPT. His name appears on receipts for this property tax when paid. He has a career job and sufficient savings to buy any property he desires. Therefore he is completely within the law. He is a very generous nephew and allows his WNA aunt and decrepit uncle-in-law to reside in HIS Bali property at no charge. Indeed, all neighbors seem to be aware (gossip) that the absent-owner is someone in their social-structure....consequently I'm assured that we'll never be robbed, but I don't take that for granted.

DenpasarHouse

Care to show one (1) piece of judicial proof for this assertion?

I don't think I can provide judicial proof, I'm not sure how to go about that, but it didn't take much googling to find these references. Do you know of any recent pro-nominee articles that I've missed? https://en.wikisource.org/wiki/Constitution_of_the_Republic_of_Indonesia

Article 33 section 3 of the Indonesian constitution: The land and the waters as well as the natural riches therein are to be controlled by the state to be exploited to the greatest benefit of the people.

As foreigners, we're not included in the definition of "the State" or that of "the People". I also think it's important to note that ownership isn't explicitly mentioned, the term "controlled by" (dikuasai in Indonesian) is used. If it used the term "ownership" you might be able to get away with the nominee system on a technicality, as it's your Indonesian nominee who owns the land. However, it's "control" that's explicitly forbidden, which is exactly what the nominee system intends to give to the foreigner. Foreign Property Ownership Under the Magnifying Glass in Indonesia - Indonesia Expat

Many who chose the nominee method to begin with should have known that any government ruling would likely not be in their favour. Now, it seems there could be additional cause for concern. Whether the BPN will be able to carry out all its due diligence on the questionable use of nominees is another matter altogether.

Bali News: Bad News for Nominee Land Ownership

The survey and inventorying of land “owned” by foreigners, according to Ferry, must be done to verify that there is no land in Indonesia controlled by foreigners.

https://okusiassociates.com/garydean/works/indonesian-land-law.html

It should be stressed that nominee agreements for land between Indonesian citizens and foreign persons are legally very weak, and will not hold up to legal challenge. Thus despite all legal agreements, the beneficial owner is ultimately depending upon the goodwill of the nominee, and of the heirs to the estate of the nominee in the event that the nominee dies.

Villas for Sale in Bali | Government to reclaim land bought with nominee agreements

The nominee structure is basically a leasehold agreement with an attempt ( yes an attempt based on the relationship and cooperation of your nominee) to have some control over the Freehold title. However this is presently under serious scrutiny by the Indonesian Government who has issued a statement in March 2015 suggesting that all land and property purchased through this process ass actually fraudulently obtained and criminally liable. It was stated by the land and spaces Minister that nominee agreements in Indonesian law are an illegal attempt to sidestep the spirit of Indonesian law which clearly states that only Indonesian citizens can own and control land through a Hak Pakai Title. As a result he stated in a press release tha the government has a legal claim on the title if this process has been used, regardless of the fact the Title is in the name of an Indonesian citizen.

Markit

This discussion has been ongoing here in Indonesia since the Dutch got chucked out and there is not one single court case THAT I KNOW OF that has backed up your standpoint or those from the quoted sources you have given DPH. This doesn't mean I put myself above the opinions of all those others but I do have a certain amount of respect for the rule of law and in the case of the nominee agreement there are simply no legal decisions to back up your conclusion and there are several that say the nominee agreement is legal... or at lease not illegal. And a raft of people willing to advise potential buyers of "the best way" - all with their own vested interest in increasing the fear and doubt around the subject. Of the 4000+ suggested expats living here, many with nominee agreement, TO MY KNOWLEDGE not one of them has lost their homes through court decisions against the nominee agreement. But what do I know? But am willing to learn...

davita

Actually DPH most of your above quotes are nearly 2 years old and none came to any fruition.... in fact I believe Ferry Badan was removed and he switched political parties...the new BPN minister is Sofyan DJalil and he has his hands so full with mafias controlling millions of hectares of land that he has called the KPK to investigate. Other quotes are from people with vested interest and nowhere do I see where a WNA has ever had title to Hak Milik property. That is indisputable. They may have contracts (Statement Deeds) or 'trusted promises' with Hak Milik title holders, which can be subject to law if disputed, but that contract never entitles a foreigner to own Hak Milik. The only quote that I agree is the one from Okusi... So where is the law broken? and if NO law is broken why would we need amnesty?

DenpasarHouse

Therefore he is completely within the law.

Nope. If he got audited, he'd still have to prove where he got the money to buy your properties. It's not a matter of how rich he is, it's simply a matter of using money that he didn't pay income tax on to buy assets . i.e. your money. The likelihood that he'll be audited and prosecuted for tax evasion maybe very low, but that's not we're arguing. You're saying he's completely within the law. That's simply not true. He's done the following illegal actions: 1. He's evaded income tax by not declaring the money you gave him to buy the properties. It's irrelevant that he's declared them as assets on his tax return. They'd still want to see where the money came from if he was audited by the tax office. 2. He's enabled a foreigner to "control", and possibly "prosper" from, Indonesian land.

TO MY KNOWLEDGE not one of them has lost their homes through court decisions against the nominee agreement.

A nightmare in paradise

Meanwhile, cautioning people about the dark side of nominee ownership has become Johnston's raison d'etre. She has fought until the bitter end: "I have lost all the way to the Supreme Court. Foreigners should be spooked. No nominee arrangement is valid."

Jeez, you old bastards are stubborn. It's like you've got hundreds of thousands of dollars riding on it and want to be able to sleep at night. ;) To be clear, I don't think anyone that's used the nominee system is in imminent danger of losing their houses and land (well . . . as long as you're still in your nominee's good books), but to say that's it's legal and will hold up in court is just wrong.

DenpasarHouse

davita wroteActually DPH most of your above quotes are nearly 2 years old and none came to any fruition.... in fact I believe Ferry Badan was removed and he switched political parties...the new BPN minister is Sofyan DJalil and he has his hands so full with mafias controlling millions of hectares of land that he has called the KPK to investigate.

All of that is irrelevant to whether it's legal or not.

davita wrote . . . nowhere do I see where a WNA has ever had title to Hak Milik property. That is indisputable.

No-one's debating that.

davita wroteSo where is the law broken?

My knowledge of Indonesian jurisprudence is pretty rusty because I've never actually studied it. BUT! If I'm not wrong, there's no higher law than the Indonesian Constitution.

davita wrote . . . and if NO law is broken why would we need amnesty?

I'm pretty sure it's illegal to evade income tax, which is what your nominee has done.

davita

DPH all your quotes are anecdotes that have been around a long time....I went to Susi Johnson's meeting and all I heard was she was cheated by her then nominee...that's entirely possible and why there needs to be trust. There was obviously bad blood between Susi and her nominee and probably went farther back when Susi's husband was alive. Another you haven't mentioned is the guy who changed his nominee to some actor fellow who convinced the WNA to invest then absconded with the money. The actor was not only found to be at fault and the property returned to the original nominee....but he's now facing criminal charges for misappropriation. You say.... [I]1. He's evaded income tax by not declaring the money you gave him to buy the properties. It's irrelevant that he's declared them as assets on his tax return. They'd still want to see where the money came from if he was audited by the tax office. 2. He's enabled a foreigner to "control", and possibly "prosper" from, Indonesian land.[/I] That's nonsense....where in law can you qualify that. I'm aware of the law regarding gifts but it isn't a gift as I expect to be paid back...I'm an Indian giver..:icon_wink: It is a stretch to suggest that law can pertain to funds transferred between family members never mind between friends...you'd need a helluva lot more courts to progress that especially at holiday time. I gave my staff Xmas presents today (cash) as we will leave tomorrow...do you suggest they file for taxes? Lending my nephew money isn't an illegal act. Millions of Indonesians lend their family money...probably more than any other nation and it's never been an issue. Come to think of it many years ago I financed another nephew-in-law thru' university...he's now 40 and has a son 12 years old and many time he's paid back in some ways..... but that was never recorded for any tax man. Most of these issues are paraded around by foreigners themselves but it's a non-event as far as Indonesians are concerned. I wish some would just keep quiet and let life go on.

DenpasarHouse

DPH all your quotes are anecdotes that have been around a long time....I went to Susi Johnson's meeting and all I heard was she was cheated by her then nominee...that's entirely possible and why there needs to be trust. There was obviously bad blood between Susi and her nominee and probably went farther back when Susi's husband was alive.

The age of the quotes is irrelevant, it's their veracity that's important. Of course you need trust with your nominee, that's obvious, and I'm not arguing that you don't. That fact that she, according to her, legally fought her nominee all the way to the Supreme court and lost is what's relevant.

Another you haven't mentioned is the guy who changed his nominee to some actor fellow who convinced the WNA to invest then absconded with the money. The actor was not only found to be at fault and the property returned to the original nominee....but he's now facing criminal charges for misappropriation.

Yeah, I remember that case. But, if I'm not wrong, the case isn't about testing the legality of the nominee system. It's about whether or not fraud was committed. Let's not forget that what is technically illegal and what is enforced and enacted can be 2 different things in Indonesia.

You say.... 1. He's evaded income tax by not declaring the money you gave him to buy the properties. It's irrelevant that he's declared them as assets on his tax return. They'd still want to see where the money came from if he was audited by the tax office. 2. He's enabled a foreigner to "control", and possibly "prosper" from, Indonesian land. That's nonsense....where in law can you qualify that.

Are we really going to debate whether tax evasion is legal or not? The Indonesian constitution forbids foreigners from "controlling" or "prospering" from Indonesian land. Surely, there's no higher law than that.

It is a stretch to suggest that law can pertain to funds transferred between family members

I'm pretty sure that only gifts given to spouses or your children are tax free. See here: http://www.expat.or.id/info/2008-IncomeTaxSDSN.pdf

There shall be excluded from taxable object: 1. aids or donations . . . etc. 2. gifts received by relatives within one degree of direct lineage, . . . etc

Lending my nephew money isn't an illegal act.

Probably not. But you didn't lend your nephew money. That's just a ruse you're using in your nominee system. A system that is illegal because of the constitution. I don't think you're denying that it's actually you that controls those properties.

Most of these issues are paraded around by foreigners themselves but it's a non-event as far as Indonesians are concerned.

Susi Johnston's Indonesian nominee, the Balinese Preman gangs, and supposedly the Supreme court of Indonesia didn't think it was a non-event.

I wish some would just keep quiet and let life go on.

Wanting to live the quiet life is perfectly reasonable, but it's no excuse for claiming something is legal and valid when it simply isn't.

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