Govt Raises Price Limit of Subsidized Houses that are Exempt from VAT

The Indonesian government has increased the price limit of subsidized houses that are exempt from value-added taxes (VAT) through the Finance Ministerial Regulation (PMK) No. 60/2023/PMK.010/2023 on price limit of public houses, temporary housing for laborers, student dormitories, and houses for private-sector workers that are exempt from VAT.

The government now exempts 11 percent VAT from a selling price of a landed house, or around Rp 16 million to Rp 24 million per unit. The regulation also stipulates that the maximum selling price for a landed house benefiting from the exemption should be around Rp 162 million to Rp 234 million for 2023. In 2024, the limit will increase to Rp 166 million-Rp 240 million for each zone.

In the previous regulation, the limit ranged between Rp 150.5 million and Rp 219 million. Fiscal Policy Agency head Febrio Kacaribu explained the increase in the price cap would follow an average increase in construction costs of 2.7 percent per year, based on the Wholesale Price Index. "Updating the VAT facility is an instrument to ramp up the number of subsidized houses," he said on Saturday.

**Finance Ministerial Regulation No. 60/2023 is available for download at the end of this article