Property taxes and charges.

factgasm

I'd like to get a conversation going about property tax, just so everyone can share information. As I understand it, property owners in Indonesia are liable for an service charge and they are also liable for tax on the purchase of property, irrespective of the Hak type. I mention this because I'm aware of a transaction from 2006 where someone (a foreigner, no names) bought a small property in Sanur for Rp1.2 billion but the figure they'd declared in the contract of sale and purchase was only Rp450 million. People that I have mentioned this to reckon this was done so that the buyer could evade tax. Apparently, tax equal to 5% of the value of the property (for properties valuable over a certain limit) is due at the time of purchase. Which office is responsible for processing this tax, I don't know. Over the last couple of weeks, when I've had a bit of spare time, I've been around to a few of the tax offices in Denpasar to get their opinion - without mentioning any names. To start with, I went to the Dinas Pendapatan (Service Charge) office at Jalan Letda Tantular in Renon. I explained the story and sought their professional opinion, but I was told I was in the wrong office and referred me to the one at Jalan Mulawarman, just off Jalan Gatot Subroto Barat. When I got there, I was told that as that office was only opened in 2011, they weren't responsible for the matter. I thought this was just BS to get rid of me and I told them so, which they denied. I wondered if anyone was going to take ownership of the matter. They then told me I should go to the RI tax office at Jalan Tantular next to Rumah Sakit BROS. When I got there and explained the Rp1.2 billion/Rp450 million, the officer there told me, with a big smile, that this was common practice, namely that whatever figure the buyer submitted in the official akte jual beli was up to him. I paused for a few moments, wondering if he intended to take matters further but he was not the slightest bit interested. I can only conclude that tax collection in Indonesia has become so dysfunctional that officers now openly advise evasion.

davita

@ post #1... When residential property changes hands, both buyer and seller must pay a five percent Land and Building Transfer Tax, which is based on the sale price or government assessed value, whichever is the higher. If some lower the sale price to effectively lower the tax thereon....that would be illegal.

mugwump

davita wrote@ post #1... When residential property changes hands, both buyer and seller must pay a five percent Land and Building Transfer Tax, which is based on the sale price or government assessed value, whichever is the higher. If some lower the sale price to effectively lower the tax thereon....that would be illegal.

My oh my........how can you have all that history in Bali behind you and get so prissy? You better check around.

davita

mugwump wroteMy oh my........how can you have all that history in Bali behind you and get so prissy? You better check around.

I'm not the one going around checking with Indonesian civil servants about property transfer tax which could possibly stir a hornet's nest....I simply searched and copy/posted what I found to be the law, as requested by the OP. So now he has the answer....and no need to go from one office in Denpaser to the next to get info. I 'own' two properties in Indonesia but wouldn't go arguing with government officials about tax implications, because I'm very familiar with what most people do. I read recently that out of 240M+ citizens of RI only 900,000 filed tax income tax returns last year. I wouldn't care to ask anyone in any Tax Office about that either. Do you have any contribution to his quest for information other than thinking I'm 'prissy'....(edit delete...I found what it meant.) Someone recently advised "when in Rome do as Romans".....wise advice indeed!

Markit

A property sale here, as anywhere, has two main parties - vendor and buyer and what goes on between them is largely a private affair, still. The notary is brought into the mix to make sure all the regulations concerning transfer of legal title are observed. What price he is told concerning that transfer is a matter of trust on all sides and as the OP has indicated largely open to interpretation - not to say fluctuation. As the notary is the tax reporting/collecting agent in this case it's fairly easy to guess what will happen in a country with kindergarten-like tax enforcement. Since there is no independent "referee" in the sales process and in many cases actual payment happens outside the borders of Indonesia it's difficult to see how the "system" could be "improved". In my last sentence you will probably have noted the over-usage of "quotations" - I strongly believe that in an open forum we should all be a bit careful about what we say (I know, I know!) now days and the art of inferral amongst intelligent contributors shouldn't be a hindrance to speaking or understanding the truth. But what do I know?

davita

Here is an English version of the rules applicable to property ownership and taxation in RI.......good luck in analysing...:confused: http://www.oentoengsuria.com/wp-content/uploads/2011/01/Indonesia-Property-Investment-Guide-January-2011.pdf

factgasm

davita wrote@ post #1... When residential property changes hands, both buyer and seller must pay a five percent Land and Building Transfer Tax, which is based on the sale price or government assessed value, whichever is the higher. If some lower the sale price to effectively lower the tax thereon....that would be illegal.

Thanks Davita, much appreciated. The man who purchased the property belongs to the old school Sydney Underworld and is a very nasty piece of work indeed. Known to have employed ex-special forces to burn down rivals' businesses and known to have entertained NSW police officers at his night club in the Crows Nest, he is currently being sued for everything he's worth in Sydney and the State Prosecutor in Indonesia intends to arrest him should he ever show up here ever again. He's a lifelong criminal who has left a trail of broken lives behind him. He's a scam artist, money launderer and brothel owner among other things. One of his brothels was raided by the AFP in 2013 where a group of Malaysian 'students' were found being kept in sexual slavery, having been smuggled into Australia from Kuala Lumpur. I'm surprised the guy is still alive actually, because he has angered quite a few of his former Underworld associates big time. Not the kind of person you want in paradise.

factgasm

Markit wroteI wouldn't be so hasty with the old prejudices there sport! Yer man sounds a damned sight more interesting over cold beers than sitting down with the Olympic class bore Davita and you probably wouldn't have to stab yourself in the eye with a fork to keep awake either.

Be warned that several years ago in Sanur he tried to poison his business associate to death by lacing his whiskey. Ever heard of tetrodotoxin? If you must drink with him get him some fava beans with his chianti or he might just stab that fork in your eye for you.

Markit

factgasm wrote He's a lifelong criminal who has left a trail of broken lives behind him. He's a scam artist, money launderer and brothel owner among other things. One of his brothels was raided by the AFP in 2013 where a group of Malaysian 'students' were found being kept in sexual slavery, having been smuggled into Australia from Kuala Lumpur. I'm surprised the guy is still alive actually, because he has angered quite a few of his former Underworld associates big time. [B]Not the kind of person you want in paradise.[/B]

I wouldn't be so hasty with the old prejudices there sport! Yer man sounds a damned sight more interesting over cold beers than sitting down with the Olympic class bore Davita and you probably wouldn't have to stab yourself in the eye with a fork to keep awake either.

factgasm

Here is an English version of the rules applicable to property ownership and taxation in RI.......good luck in analysing...:confused: http://www.oentoengsuria.com/wp-content/uploads/2011/01/Indonesia-Property-Investment-Guide-January-2011.pdf

Cheers for that.