Govt to give local REITs special tax treatment

JAKARTA. The central government has called on municipal governments to cut the building and land acquisition tax (BPHTB) by a maximum 2,5% and give special tax treatment to Real Estate Investment Trusts (REITs) to boost its competitiveness.

Compared to Singapore, where the total tax for REITs is only 3%, Indonesia charges a tax of more than 8% on similar instruments. It consists of a 5% income tax from the central government and a 3% BPHTB imposed by municipal governments.

"We have cut the income tax to 5%, but some municipal governments are still reluctant to cut their BPHTB," Coordinating Economic Minister Darmin Nasution told thejakartapost.com after meeting with the President and municipal government representatives in the Presidential Office on Monday.

They declined to cut the BPHTB because it would make them lose a significant amount of income from construction projects. Hence, the central government decided to only give special tax-treatment to REITs.

"The same percentage of BPHTB will be imposed on other construction projects and the special rate is only to be given to those issuing REITs," Darmin said.

Only five municipal governors attended the meeting: Yogyakarta Governor Sri Sultan Hamengkubuwono from Yogyakarta, DKI Jakarta Governor Basuki "Ahok" Tjahaja Purnama, East Java Governor Soekarwo, South Sulawesi Governor Syahrul Yasin Limpo and West Java Vice Governor Deddy Mizwar. (Anton Hermansyah)

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