New tax scheme for land speculators

The uncertainties have led to unease in property sector. Understandably, the developers control a significant number of the land ownerships in this country. This kind of land ownership is also known as landbank. By having the landbank, the developers may utilize the lands for their business purposes in the future.

Thus, the developers denied the definition of ‘idle land’ for their landbanks. Hence, they rejected the government’s plan to impose additional taxes over this kind of land ownership.

The developers rejected the assumption that they have deliberately left the land idle. They also denied the assumption that the landbank is an object of speculation.

Property observer Ali Tranghanda estimates, the government may apply the progressive tax. However, the government should have clear criteria on ‘idle land’. “Actually, an area with a site plan can be categorized as productive land. However, the tax progressive may be applied if within the two year period the developer has not yet started the construction,” Ali suggests.

The government has responded to the developers’ rejection. Sofyan promised that the property and industrial zone investors will be exempted from the progressive tax.

However, the interesting point is that not all developers agree with the government plan to exclude property and industrial zone investors from the progressive tax.

The minor developers, which are the members of the Indonesian Housing and Residential Developers Association (Apersi), even agree with the government’s plan to impose progressive tax on the landbank. “I will be happier if the developers are included in the progressive tax regulation,” said the Chairman of Apersi.

Despite of the polemics between the minor and major developers, the statement of Sofjan Djalil is apparently aiming at targeting individual land ownership.

The government offers some options of taxation over the profits of land transaction. For an example, three years ago you bought a plot of land with the price of Rp 200,000 per meter square. This year, the price of the land has increased to the price of Rp 1 million per meter square. In this case, if you sell the land with the current price, the price’s difference of Rp 800,000 per meter square will be subject to the progressive tax.