The investors can buy and own land in Indonesia for a certain period of time by using the following rights:
- The Right of Exploitation (Hak Guna Usaha or HGU) is granted for a maximum 25 years and can be extended for 25 years. For a company that requires a longer period, HGU for no more than 35 years may be granted.
- The Right of Building (Hak Guna Bangunan or HGB) is the right to build and to own a building on land which does not belong to someone’s property for a period of no more than 30 years and can be extended for no more 20 years.
- The Right of Use (Hak Pakai) is the right to use and/or to collect the product, from land directly controlled by the state, or land owned by the other persons which gives the rights and obligations stipulated in the decision upon granting his right by the authorized official, or in the agreement to work the land, as far as it does not conflict with the spirit and the provision of the law.
HGU, HGB, and Right of Use can be owned by Indonesian citizens, a foreigner residing in Indonesia, corporate bodies established under Indonesian Law and are based/ having an office in Indonesia, and foreign companies that have a representative office in Indonesia.
The HGU and HGB ownership are allowed to change during the contract period. However, the land usage right can be transferred to other parties with the approval of the relevant government official. The individual land usage right can also change hands.
Yes, it depends on the type of property:
- For a landed building (house, office, factory) it is only allowed for a foreigner or FDI company and the status of the land is HGB or Right of Use. Regarding the ownership of a landed house, recently the Government of Indonesia has revealed the new Government Regulation No. 103 of 2015 on House Ownership of Foreigners Residing in Indonesia. This regulation allows foreigners to buy a landed house under the Right of Use category for a period up to 80 years (an initial period of 30 years and can be extended twice by 20 years and a further 30 years).
- For a condominium or apartment and office space, the foreigner or FDI company can own it as long as it isn’t a part of government-subsidized housing development and the land status of the building is strata title status under the Right of Use. Still based on the same regulation, regarding apartments, foreigner allows to purchase an apartment under the Right of Use category and this only involves luxurious apartments priced over IDR 10 billion.
- The title of the plantation land is HGU for agricultural, fishery or animal husbandry purposes. You may buy and own the land, but the status of the land is state-owned land and the HGU is only valid for a certain period of time.
- The type of plantation crops must be in accordance with the HGU.
This right can be held by Indonesian individuals or entities as well as the government approved FDI companies and can be pawned.
FDI companies that are property developers can buy land in Indonesia to develop a property. The status of the land is HGB which will be divided into small lots accordingly. Then, the property buyer can submit an application to change the status of the land to Ownership Rights (Hak Milik) which is only allowed for Indonesian citizens.
The basic tax obligation is Income Tax (Pajak Penghasilan or PPh) which is progressive and applied to both individual(s) and enterprises. FDI companies that are located and conduct business activities in Indonesia and foreigners who work and earn income in Indonesia generally must bear the same tax obligations as the resident taxpayers. The self-assessment method is used to calculate income tax.
The Tax Withholding system is used in Indonesia to collect the income tax. If a certain item of income is subject to withholding tax, the payer is responsible for holding or collecting taxes. For example, employers are required to withhold income tax of the salaries paid to their employees and pay the tax to the tax office on their behalf.
Detailed information on Income Tax should refer to The Income Tax Law No. 36 of 2008.
Land & Building Tax (Pajak Bumi dan Bangunan or PBB)
The owners of land & buildings have to pay tax annually on land, buildings and permanent structures. The effective rates are nominal, typically not more than one-tenth of one percent per year (0.1%) of the asset value.
Value Added Tax or VAT
In normal cases, a 10% VAT is applied to imports, manufactured goods, and most services. However, in accordance with the Government Regulation No. 7 of 2007, Free Charge of VAT to the importation of certain VAT charged goods having the strategic term which consist of:
- Capital goods in the form of machinery and factory equipment, either in installed or separated, including spare parts
- Feed of poultry and fish and raw materials to make feed
- Seed and/or seeding of agricultural material, plantation, forestry, livestock, aquaculture, or fishery
- Agricultural products
Sales Tax on Luxury Goods (Pajak Penjualan atas Barang Mewah or PPnBM)
This tax ranges from 10% to 75%. The list of the tax should be referred to The Government Regulation No. 12 of 2001 jo. No. 43 of 2002 jo. No. 46 of 2003 and other related tax implementation regulations.
The stamp duties nominal are either IDR 3,000 or IDR 6,000 on certain documents. The rate of IDR 6,000 is applicable for letters of agreement and other letters, such as Notary Deed and Land Deed including its copies. For all documents bearing a sum of money, the rate is IDR 6,000 when the value stated in the document is more than IDR 1 million, and IDR 3,000 when the value is between IDR 500,000 and IDR 1 million. Below IDR 500,000 is not subject to stamp duty. For cheques, the rate is IDR 3,000 regardless of money value stated.
Deemed Withholding Tax
Applicable for Trade Representative Office in Indonesia. Decree of Directorate General of Taxation, KEP-667/PJ./2001, states that deemed withholding tax for Trade Representative Office must be paid at the rate of 0.44% out of 1% gross export value.
This is only applicable to foreign taxpayers who have no double-tax treaty agreement. For more information on the payment details, please refer to Directorate General of Taxation Circular No. SE-2/PJ.03/2008.
Beside tax, local government in the provinces or cities usually apply retribution for some business sectors and it varies from region to region.
Yes, foreigners who will travel to Indonesia should apply for a visa from the Indonesian Embassy in their respective countries unless they come from one of the visa-exempt countries or the countries that qualify for Visa on Arrival or VoA (Visa Kunjungan Saat Kedatangan).
All visitors must hold a passport valid for 6 months from the date of arrival and have valid return ticket. The immigration entrance officer at the airport/seaport may ask the passenger to show any necessary documents (such as hotel reservation and other financial evidence).
Regarding the purpose of the visit, ASEAN Countries Nationality Visitors are able to visit Indonesia without any visa for the purpose of official duties, education, tourism, business, government, and social culture purpose. They may stay up to 30 days without renewal or convert to other types of visas.
Presidential Regulation Number 21 of 2016 regarding Visa-Free Visit. This latest regulation replaces its previous preceding the Presidential Regulation Number 104 of 2015 on Amendment of Presidential Decree Number 69 of 2015.
As per this regulation, 169 recipient countries that are free of visit visas are given a stay permit for 30 days and cannot be extended.
The countries are:
Albania; Algeria; Andorra; Angola; Antigua and Barbuda; Argentina; Armenia; Australia; Austria; Azerbaijan; Bahamas; Bahrain; Bangladesh; Barbados; Belarus; Belgium; Belize; Benin; Bhutan; Bolivia; Bosnia and Herzegovina; Botswana; Brazil; Brunei; Bulgaria; Burkina Faso; Burundi; Cambodia; Canada; Cape Verde; Chad; Chile; China; Comoros; Costa Rica; Cote d’Ivoire; Croatia; Cuba; Cyprus; Czech Republic; Denmark; Djibouti; Dominican Republic; Ecuador; Egypt; El Salvador; Estonia; Fiji; Finland; France; Gabon; Gambia; Georgia; Germany; Ghana; Greece; Grenada; Guatemala; Guyana; Haiti; Holy See; Honduras; Hong Kong; Hungary; Iceland; India; Ireland; Italy; Jamaica; Japan; Jordan; Kazakhstan; Kenya; Kiribati; Kuwait; Kyrgyzstan; Laos; Latvia; Lebanon; Lesotho; Liechtenstein; Lithuania; Luxembourg; Macau; Macedonia; Madagascar; Malawi; Malaysia; Maldives; Mali; Malta; Marshall Islands; Mauritania; Mauritius; Mexico; Moldova; Monaco; Mongolia; Morocco; Mozambique; Myanmar; Namibia; Nauru; Nepal; Netherlands; New Zealand; Nicaragua; Norway; Oman; Palau; Palestine; Panama; Papua New Guinea; Paraguay; Peru; Philippines; Poland; Portugal; Qatar; Romania; Russia; Rwanda; Saint Kitts and Nevis; Saint Lucia; Saint Vincent and the Grenadines; Samoa; San Marino; Sao Tome and Principe; Saudi Arabia; Senegal; Serbia; Seychelles; Singapore; Slovakia; Slovenia; Solomon Islands; South Africa; South Korea; Spain; Sri Lanka; Suriname; Swaziland; Sweden; Switzerland; Taiwan; Tajikistan; Tanzania; Thailand; Timor-Leste; Togo; Tonga; Trinidad and Tobago; Tunisia; Turkey; Turkmenistan; Tuvalu; Uganda; Ukraine; United Arab Emirates; United Kingdom; United States of America; Uruguay; Uzbekistan; Vanuatu; Venezuela; Vietnam; Yemen; Zambia; Zimbabwe.
Passport holders from 15 countries and territories can visit Indonesia for the purpose of tourism, business, education, government-related tasks, socio-culture, journalism, or transit. These 15 countries can enter and exit Indonesia through any airport or harbor. Meanwhile, nationals from 75 countries and territories can visit Indonesia for the purpose of tourism only and can only enter and exit Indonesia through certain airports and harbors These 75 countries can obtain Visa-Free Visit at certain airports and harbors.