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Increase in Luxury Tax Threshold to Attract Investment

The Double View Mansions in Pererenan, Canggu.

The Indonesian government has recently raised the threshold at which the luxury tax is applied.

In June, President Joko Widodo announced that the luxury tax of 20 per cent will only be applied for houses and flats worth over Rp30billion (US$1.4 million).

Previously, the policy applied to purchases of properties worth over Rp20billion. According to analysts, Bali is set to attract more property buyers after the new policy is implemented. The president aims to make Indonesia more welcoming of foreign investment in order to boost economic growth.

Only Indonesians citizens are allowed to own properties in Indonesia. However, foreigners are allowed to lease properties for an initial period of 30 years, with a subsequent extension of 20 years, followed by another 30 years in Jakarta. Developers are currently lobbying the government to grant an 80-year permit for foreign homebuyers.

“This is a big change,” said Georg Chmiel, Executive Chairman at, a Chinese website for buyers of overseas property. “Foreigners have the right to possess property for up to 80 years and are much less likely to pay 20 per cent sales tax when selling. We expect demand to increase,” he added.

Source: South China Morning Post

See:  Can a Foreigner Buy Property in Indonesia?

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