Indonesia's 2026 home VAT incentive: eligibility and calculation

Finance Ministry Regulation PMK 90/2025 can reduce the VAT on a qualifying new home delivered in 2026. It does not change which property rights a foreign buyer may lawfully hold.

A foreign individual can potentially use Indonesia's 2026 government-borne VAT incentive on one qualifying new house or residential apartment if the buyer has an Indonesian taxpayer number (NPWP) and is legally entitled to hold that type of property. The unit must be new, ready to occupy, first delivered by the taxable developer, carry the required identity code, cost no more than Rp5 billion and be legally handed over in 2026. The government bears 100% of the VAT attributable to the first Rp2 billion of price. It does not bear all the VAT on a Rp5 billion purchase. This does not give a foreigner Hak Milik freehold title. An ordinary Bali lease assignment would not normally be the first taxable developer delivery of a new ready-to-occupy home described by PMK 90/2025; that conclusion is transaction-specific and should be confirmed in writing.

Answer two separate questions first

The first question is can this buyer lawfully acquire this right over this asset?

The second is does this particular developer delivery qualify for the 2026 VAT incentive?

Meeting the tax conditions does not create a land right. PMK 90/2025 expressly includes a foreign citizen with an NPWP only insofar as the person satisfies Indonesia's separate rules for foreign ownership of a house or apartment. That sentence is a condition, not a shortcut.

If the proposed transaction is a private leasehold transfer, a resale villa, a land lease plus construction contract, shares in a PT PMA or an unfinished project without qualifying handover, do not assume this incentive applies merely because someone calls the asset “property”.

The actual 2026 conditions

The regulation is narrower than the headline:

• the buyer is one individual, for one house or one residential apartment unit;
• a foreign buyer has an NPWP and a lawful ownership route for that asset;
• the sale price is no more than Rp5 billion;
• the asset is new and ready to occupy;
• it is the first transfer by the taxable developer that built it;
• the unit has the required official property identity code;
• the sale deed or fully paid binding sale agreement, and the actual handover recorded in a formal handover certificate (BAST), occur between 1 January and 31 December 2026;
• no deposit or first instalment was paid before 1 January 2026;
• the developer issues and reports the required tax invoice and registers the handover;
• the buyer does not transfer the unit during the first year.

Miss one of those conditions and the VAT can be collected under the normal rules.

What “100% VAT borne by government” really means

It means 100% of the VAT attributable to the first Rp2 billion of selling price, provided the total selling price does not exceed Rp5 billion.

For a qualifying Rp1.8 billion unit, that can cover the VAT on the full price. For a qualifying Rp4 billion unit, the incentive applies only to the first Rp2 billion; VAT on the balance remains outside the facility. The exact invoice must be produced by the taxable developer. This is not a rebate the buyer should estimate informally and deduct from the final payment.

Worked invoice example

Assume an eligible new home has a selling price before VAT of Rp4 billion. Let V be the total VAT shown on the taxable developer's valid invoice. The covered price portion is Rp2 billion, or half of the selling price. If the invoice allocates VAT proportionately across that price, the purchase calculation is:

This example explains only how the covered portion is allocated. It does not set the VAT rate or replace the developer's tax invoice. The developer and an Indonesian tax adviser must confirm the taxable base, rate, eligibility, invoice and handover before the buyer includes the benefit in the purchase budget.

Why many Bali transactions will not fit

The common Bali investor transaction is often not a first developer delivery of a qualifying residential unit. It may be:

• an assignment of remaining lease time;
• a lease from an Indonesian landholder;
• a resale of an existing villa;
• a construction mandate on separately secured land;
• a company or share transaction;
• tourist accommodation rather than a qualifying residential product.

Those distinctions matter. A beautiful finished villa and a tax-defined qualifying rumah tapak are not automatically the same transaction.

Five documents to obtain before counting the tax benefit

Ask the developer, the land-deed official or notary (PPAT), and the tax adviser to put these on one page:

1. the exact right and lawful holder after closing;
2. the developer's taxable status and confirmation that this is the first delivery;
3. the unit identity code and ready-to-occupy evidence;
4. the 2026 deed/fully paid agreement, handover timetable and BAST responsibility;
5. a draft split of the tax invoice showing the subsidised and non-subsidised portions.

If the answer is “the notary will arrange it later”, do not include the incentive in the purchase calculation yet.

Questions we get asked directly

Does this let a foreigner buy a Bali villa freehold? No. The regulation explicitly preserves the separate foreign-ownership rules. It is a VAT facility, not a land-law amendment.

Does it apply to leasehold? An ordinary lease assignment would not normally be the first taxable developer delivery of a new ready-to-occupy house or residential apartment described by PMK 90/2025. This is an inference from the transaction conditions, not a universal lease rule. Do not include the benefit without a transaction-specific written opinion.

Is the whole Rp5 billion price VAT-free? No. The total qualifying price may be up to Rp5 billion, but the government-borne VAT applies only to the first Rp2 billion of price.

Can I sell immediately? A transfer within one year of delivery disqualifies the facility under the regulation.

sources checked: 20 July 2026 · facility window ends 31 December 2026

Sources: PMK 90/2025, Ministry of Finance JDIH and Directorate General of Taxes, checked 20 July 2026. General information only; not tax, land, title or transaction advice.