Government to Waive VAT for Home Purchases Until June 2024

President Joko Widodo (Jokowi) has once again extended a helping hand to the Indonesian real estate sector. The government will bear the burden of Value-Added Tax (VAT) for every home purchase until the coming year.

Minister of Economic Affairs Airlangga Hartarto unveiled this relaxation as the outcome of a recent limited meeting held earlier today.

"Following the limited meeting discussing the real estate sector, President Joko Widodo has granted his approval. Moving forward, the government will cover the VAT for property purchases until June 2024," he stated at Hutan Kota Plataran Senayan, Jakarta, on Tuesday (24/10).

Airlangga elaborated that the government will fully cover the VAT until June 2024, and afterward, it will subsidize 50% of the VAT until December 2024. These rules apply to homes priced at less than Rp 2 billion. Additionally, the government is providing administrative support for Low-Income Community (MBR) housing amounting to Rp 4 million. "The administrative costs for approximately 13.3 million people in the MBR category will be covered by the government," he noted.

According to Airlangga, 2023 represents a strategic moment to maintain economic stability. "We hope to address the backlog, which has reached 12.1 million, in the real estate sector," he emphasized.

Airlangga disclosed the governments motivation for offering incentives to the real estate industry in the near future to boost its contribution to the nations Gross Domestic Product (GDP).

These incentives take the form of the government covering the VAT and providing administrative support for Low-Income Community (MBR) housing worth Rp 4 million.

"In the subsequent meeting on VAT for housing, particularly to stimulate the real estate sector with a low GDP growth of 0.67% and construction at 2.7%," Airlangga mentioned after the limited meeting with President Joko Widodo at the Presidential Palace on Tuesday (24/10/2023).

Both of these sectors make substantial contributions to the nations GDP, ranging from 14% to 16%. Additionally, they employ 13.8 million people, contributing significantly to tax revenues at 9.3% and Regional Original Revenue (PAD) amounting to 31.9%.