Understand the key updates to Indonesia’s Right to Cultivate (HGU) under Government Regulation No. 18 of 2021. This comprehensive summary breaks down HGU eligibility, land limits, rights and obligations, and validity periods to help businesses navigate land rights with ease.
Workshop - License of Property Development in Indonesia
A Land Acquisition and Licensing For Property Development In Indonesia from Leks&Co
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Building utilization is an activity of utilizing a building in accordance with the functions which is specified in the building construction license including maintenance, and periodic inspections activity. Building utilization can only be performed after the owner of the building obtains Certificate of Feasible Function. Certificate of Feasible Function hereinafter called SLF means certificate which is granted by Local Government against the building that has been completed and has met the requirement of feasibility function based on examination’s result of building’s feasibility function as a requirement to be utilized. (Article 1 number 16 Local Regulation of DKI Jakarta Number 7 of 2010 on Building).
To get SLF a person must submit a written request to the Head of Department which is responsible in supervision and control of the building. Written request which is submitted must be attached with some documents, as follows:
a. Identity Card (KTP)
b. Taxpayer Identification Number (NPWP)
c. Certificate of land
d. Building Construction License (IMB)
e. Maintenance report or technical building assessment report
f. As built drawing building
Head of Department may suspend or reject the requests of SLF that do not meet the requirements. The suspension of the request of SLF occurs when the requests of SLF do not yet meet the requirements of the building feasible function. The suspension of SLF is notified in writting to the applicant together with the reason of the suspension. The suspension which has passed the time period of 12 (twelve) months from the date of the suspension letter is received can be rejected with rejection notification letter which is given to the head of Neighborhood Association and / or Citizen Association in the applicant’s building areas, if the location of applicant is unknown or the applicant does not want to receive the letter.
SLF is issued within a period of 30 (thirty) days from the date of approval of document of the technical plan documents is granted. The validity period of SLF is different for each type of building. The period of SLF for simple single residential building and a simple row house is unlimited. The period of SLF for single residential building and row houses up to 2 (two) floors are 20 (twenty) years. The period of SLF for luxurious single residential building, the other general buildings, and certain buildings are 5 (five) years.
The request for renewal of SLF of the building is proposed no later than 60 (sixty) calendar days before the expiration of the SLF of the building or extension of the SLF of the building terminates.
A person who utilizes the building but does not have the SLF shall be punished with a maximum confinement of 6 (six) months or a maximum fine of Rp 50,000,000 (fifty million Rupiah).
Maria Amanda
Local Government of DKI Jakarta has issued the Governor Regulation of DKI Jakarta Number 38 of 2012 on Green Building (“Governor Regulation No.38/2012”) the regulation regulates the implementation of the concept of energy efficiency and environmentally buildings. Green building means a building that is responsible against environment and resource efficiency since the planning, construction, utilization, maintenance, until deconstruction (Article 1 number 11 of Governor Regulation No.38/2012).
The intention of issuance of the Governor Regulation No.38/2012 is as a framework for the official or the applicant in order to meet the requirements of a green building, having its purpose to realize the implementation of the building construction by paying attention to the aspect of efficiency, maintanance and using resources efficiently.
Construction of the building with a certain type and size of both new buildings and existing buildings must meet the requirements of green building. The types and size of buildings that must meet the requirements of green building include:
a. Apartment buildings, office buildings, trade buildings, and buildings which have more than one function within one (1) building with the size of entire floor of the building is more than 50,000 m2 (fifty thousand square meters);
b. Business functions, hotel, social and cultural functions, and health care buildings, with the size of the entire floor of the building is more than 20,000 m2 (twenty thousand square meters);
c. Social and cultural functions, educational service buildings, with the size of the entire floor of the building is more than 10,000 m2 (ten thousand square meters).
New buildings mean buildings that are currently in the planning stage. The technical requirements for green building of the new buildings include:
a. Energy efficiency;
Energy efficiency includes the efficiency of the building veil systems, ventilation systems, air systems, lighting systems, building transportation systems, and electrical systems.
b. Water efficiency;
Water efficiency includes the planning of water-saving sanitary equipment and planning of the use of water.
c. Indoor air quality;
Indoor air quality must calculate the air circulation in the room and the input of fresh air so itdoes not harm the occupants and the environment.
d. Land and waste management, and
Land and waste management include the requirements regarding spatial landscape planning on the inside and outside of the building and planning of rainwater reservoir systems, supporting facilities, and solid and liquid waste management.
e. Implementation of construction activities.
Implementation of construction activities includes safety, work health and environment, water conservation when conducting the construction activities, and the management of hazardous and toxic waste in construction activities.
Existing buildings means buildings that are under construction and / or already in the utilization stage. The technical requirements for green building of existing buildings include:
a. Conservation and energy efficiency;
b. Conservation and water efficiency;
Conservation and water efficiency include the use of water efficiently and water quality monitoring.
c. Indoor air quality and thermal comfort, and
d. Operational management / maintenance.
Operational management / maintenance activities include monitoring and evaluation activities.
The planning and construction of the building which violate this Governor Regulation may be imposed with administrative sanction by not issuing Building Construction License (IMB) and / or Certificate of Feasible Function (SLF).
Maria Amanda
Under Article 1 of Law Number 20 of 1961 on Revocation of Rights of Land and/or Objects Over the Land (“Law No.20/1961”), President in an urgent circumstance after hearing the Minister of Agrarian Affairs, Minister of Justice and the related Minister may revoke the rights of land and/or objects over the land. Revocation of rights of land and objects over the land can be performed if the land and/or objects over the land are needed for public interest, including the nation’s interests and the common interests of the people, as well as for development purposes.
Submission of the Request of Revocation of Rights of Land
Under Article 2 of Law No.20/1961, the request of revocation of rights of land and/or objects over the land is proposed by an interested party to the President with the intercession of the Minister of Agrarian Affairs (now the Head of the National Land Agency of the Republic of Indonesia), through the Head of Inspection Agrarian (now the Local Office of Provincial National Land Agency). The request is accompanied with:
land-use plan and the reasons;
information about the owner of the rights, and location of the land, size of the land, and the type of right of land that will be revoked;
shelter plan for the party whose rights will be revoked.
The Process of Revocation of Rights of Land
After receiving the submission of request for revocation of rights of land, the Local Office of Provincial National Land Agency asks for the consideration of Local Government’s Head to give its consideration about the request of revocation of rights of land. However, the Local Office of Provincial National Land Agency also asks for the consideration of the appraiser committee to estimate the compensation costs.
Within a period not later than 3 (three) months, the Local Government’s Head should have submitted its consideration and the appraiser committee has to tell the estimation of the compensation costs to the Local Office of Provincial National Land Agency. After obtaining the consideration and estimation of the compensation costs, the Local Office of Provincial National Land Agency submits the request for revocation of rights of land to the Head of the National Land Agency of the Republic of Indonesia.
If within 3 (three) months the Local Government’s Head and appraiser committee has not submitted its consideration, the Local Office of Provincial National Land Agency may submit the request for revocation of rights of land to the head of the National Land Agency of the Republic of Indonesia, without waiting for the consideration from the Local Government’s Head and appraiser committee.
Head of National Land Agency of the Republic of Indonesia submits the request for revocation of rights of land to the President accompanied with the consideration of Minister of Justice and the related Minister. Submission of revocation of rights of land must be implemented to obtain the President’s decision regarding the revocation of rights of land.
Revocation of Rights of Land in an Urgent Circumstances
Under Article 6 of the Law No.20/1961, it regulates that in urgent circumstances, the Local Office of Provincial National Land Agency, after receiving a request for revocation of rights of land, can directly propose the request of revocation of rights of land to the Head of the National Land Agency of the Republic of Indonesia without the consideration of Local Government’s Head and the estimation of the compensation from appraiser committee.
Based on the request, the Head of National Land Agency of the Republic of Indonesia issued a decision letter that provides permission for the interested party to control the land and the object over the land. The decision letter will be followed by presidential decision on the request of revocation of rights of land to be granted or rejected. If the request is rejected, the interested party has to return the land and/or related object to its original condition, and/or give equivalent compensation to the owner of the rights of land.
Decree of the Head of National Land Agency of the Republic of Indonesia on the revocation of rights of land is published in the State Gazette of the Republic of Indonesia and its derivatives will be given to the owner of rights of land and/or objects whose rights were revoked. The content of the decision letter also be announced through the newspapers. The cost of the announcement is carried out by the interested party.
Compensation
Under Article 8 of Law No.20/1961, if the owner of the rights of land whose land will be revoked does not accept compensation because the amount of the compensation is considered less, then he can propose for appeal to the High Court that jurisdiction covers the location of the land and/or related object. The court will determine the amount of compensation.
After the decision letter of the revocation of rights of land is implemented and the compensation is paid, then the land which right of land is revoked is directly controlled by the state.
Maria Amanda
Background
Business sale and purchase of property has been demanded by many people. In performing the business sale and purchase of property, it does not only need an agreement between seller and buyer, but there are things that shall be performed by both parties as one of the obligations to State. The relevant obligation is payment of a tax in acquisition of property that should be performed by buyer and seller.
In Indonesia, it has been known some types of tax that has to be met by seller and buyer in business sale and purchase of property, as follows:
1. Land and Building Tax (L&B Tax)
The regulation on L&B Tax is contained in the Law Number 12 of 1985 on Land and Building Tax as amended by the Law Number 12 of 1994 on the Amendment of Law Number 12 of 1985 on Land and Building Tax (“L&B Tax Law”).
Based on the Elucidation in Article 3 paragraph (2) of L&B Tax Law, L&B Tax is a state tax which is the majority of its revenue is a regional income that is used for the provision of facility that is also enjoyed by the Central Government and Local Government. In the beginning, L&B Tax is a tax where is its administration process is performed by the central government and all revenues are distributed to the regions with a certain proportion. In the next development, the Law Number 28 of 2009 on Regional Tax and Retribution (“Law No. 28/2009”) is applied in which the entire management process of L&B Tax, especially in rural and urban sector will be performed by local government. Tariff of L&B Tax which is imposed to tax object is 0, 5%.
Based on the Minister of Finance Decree Number 362/KMK.04/1999 on the Grant of Land and Building Tax Reduction, as amended by the Minister of Finance Regulation Number 110/PMK.03/2009 on the Amendment of Minister of Finance Decree Number 362/KMK.04/1999 on the Grant of Land and Building Tax Reduction, the amounts of L&B Tax incentive are:
• Taxable Sales Value (NJKP) of 20% for the Tax Object Sales Value (NJOP) < Rp 1 Billion; • The grant of Tax Object Sales Value which is not imposed Tax (NJOPTKP); • The grant of reduction because of certain condition of tax object which is related to the tax subject and/or because of other specific causes. 2. Acquisition Levy on Right of Land and Building (Bea Perolehan Hak Atas Tanah dan Bangunan / BPHTB) The regulation on Acquisition Levy on Right of Land and Building is governed in the Law Number 21 of 1997 on Acquisition Levy on Right of Land and Building as amended by Law Number 20 of 2000 on the Amendment of Law Number 21 of 1997 on Acquisition Levy on Right of Land and Building (“BPHTB Law”). Under the Article 1 paragraph (1) of BPHTB Law, Acquisition Levy on Right of Land and Building is a tax which is imposed to the acquisition of right of land and or building. The Acquisition Levy on Right of Land and Building is imposed to the buyer (Article 2 paragraph (1) and paragraph (2) of BPHTB Law). Tariff of Acquisition Levy on Right of Land and Building is 5% (five percent). Under the Minister of Finance Decree Number 561/KMK.03/2004 on the Grant of Acquisition on Right of Land and or Building Reduction, as amended by the Minister of Finance Regulation Number 104/PMK.01/2005, as amended by Minister of Finance Regulation Number 91/PMK.03/2006 on the Second Amendment of Minister of Finance Regulation Number 561/KMK.03/2004 on the Grant of Acquisition on Right of Land and or Building Reduction, the incentive of Acquisition Levy on Right of Land and Building property are: The grant of Tax Object Sales Value which is not imposed a Tax (NPOPTKP); The grant of reduction because of certain condition of taxpayer which is related to tax object and/or because of other certain causes. 3. The Income Tax of the Income from Transfer on Right of Land and Building (the Income Tax in Article 4 paragraph 2) The regulation on Income Tax on The Income from Transfer on Right of Land and Building is set forth in the Article 4 paragraph (2) of Law Number 7 of 1983 on the Income Tax, as amended by Law Number 7 of 1991, as amended by Law Number 10 of 1994, as amended by Law Number 17 of 2000, as amended by Law Number 36 of 2008 on the Fourth Amendment of Law Number 7 of 1983 on the Income Tax ("Income Tax Law"). Income tax which is imposed to the income of transfer on right of land and or building is 5% (five percent) of gross amount of transfer on land’s or building’s value. Income tax of transfer on right of Simple House and Simple Condominium which is performed by taxpayer that is his/her principal business to transfer on right of land and/or building is 1% (one percent) of gross amount of transfer value. Under the Article 4 paragraph (2) of Income Tax Law, the income that may be imposed the final tax are: a. the income of deposit interest and other savings, bond interest and state debenture, and saving interest which are paid by the cooperative to the individual cooperative member; b. the income of lottery prize; c. the income of shares and other securities transaction, derivative transaction which is traded on the stock, and the share sale transaction or transfer of equity shares in the company's partner which is earned by venture capital company; d. the income of transfer of asset transaction in the form of land and/or building, construction service business, real estate business, and rent of land and/or building; and e. the other certain incomes, which is set by or under a Government Regulation. Based on the provision in the Article 4 paragraph (2) letter d, it may be concluded that the income of sale and purchase of property transaction is imposed to the income tax. Under the Government Regulation Number 48 of 1994 on Payment of Income Tax on Income from The Transfer on Right of Land and/or Building, as amended by Government Regulation Number 27 of 1996, as amended by Government Regulation Number 79 of 1999, as amended by Government Regulation Number 71 of 2008 on the Third Amendment of Government Regulation Number 48 of 1994 on Payment of Income Tax on Income from the Transfer on Right of Land and/or Building, the incentive of income tax on the income from transfer on right of property land are: The Income Tax Exemption for individual person who has an income below the tax exempt income (PTKP/Penghasilan Tidak Kena Pajak) which is performing the transfer on right of land and/or building with transfer gross amount less than Rp 60,000,000.00 (sixty million Rupiahs) and is not a broken amount; The imposition of 1% (one percent) tariff from the gross amount of transfer value on the transfer on right of Simple House and Simple Condominium which is performed by Taxpayer which is the essential business is performing the transfer on right of land and/or building (general tariff of 5%). 4. Value Added Tax (VAT) The regulation of VAT is set forth in the Law Number 8 of 1983 as amended by Law Number 11 of 1994, as amended by Law Number 18 of 2000, as amended by Law Number 42 of 2009 on Third Amendment of Law Number 8 of 1983 on Value Added Tax of Goods and Services Value and Luxury Sales Tax (“VAT Law”). Under the Elucidation of VAT Law, Value Added Tax is a tax on the consumption of goods and services in the Custom Area which is imposed in multilevel in every production and distribution lines. Custom Area is the region of Republic of Indonesia which covers land, water, and air space above it, and certain places in the Exclusive Economic Zone and continental shelf which is applied to the Law that is set out of customs. Tariff of VAT is 10% (ten percent) of transaction value. Article 4 paragraph (1) of VAT Law states that the VAT is imposed on: a. delivery of taxable goods in the Customs Area which is performed by the entrepreneur; b. import of taxable goods; c. delivery of taxable services in the Customs Area by entrepreneur; d. the utilization of Intangible Taxable Goods from the outside of Customs Area in the Customs Area; e. the utilization of Taxable Services from the outside of Customs Area in the Customs Area; f. export of Tangible Taxable Goods by a Taxable Entrepreneur; g. export of Intangible Taxable Goods by a Taxable Entrepreneur; and h. export of Taxable services by Taxable Entrepreneur. The Exception for the VAT Collection 1. For Simple House and Very Simple House Under the Minister of Finance Regulation Number 36/PMK.03/2007 on the Limitation of Simple House, Very Simple House, Simple Condominium, Pondok Boro, Student Dormitory, and other houses, which is based on Delivery is Exempted from Value Added Tax, as amended by Minister of Finance Regulation Number 80/PMK.03/2008, as amended by Minister of Finance Regulation Number 31/PMK.03/2011 on the Second Amendment of the Minister of Finance Regulation Number 36/PMK.03/2007 on the Limitation of Simple House, Very Simple House, Simple Condominium, Pondok Boro, Student Dormitory, and other houses, which is based on Delivery is Exempted from Value Added Tax; the Simple House and Very Simple House which is exempted from Value Added Tax is a house which is the acquisition is cash or financed through subsidized or not subsidized credit facility, or through the financing based on the Islamic principle, which meets the following provisions: a. The building area is not more than 36 m2 (thirty-six square meters); b. The sale price is not more than Rp 70,000,000.00 (seventy million Rupiah); c. It is the first house that is owned and used alone as a residence and not transferred within a 5 years period of time since it is owned. 2. For Simple Condominium Under the Minister of Finance Regulation Number 36/PMK.03/2007 on the Limitation of Simple House, Very Simple House, Simple Condominium, Pondok Boro, Student Dormitory, and other houses, which is based on Delivery is Exempted from Value Added Tax, as amended by Minister of Finance Regulation Number 80/PMK.03/2008, as amended by Minister of Finance Regulation Number 31/PMK.03/2011 on the Second Amendment of the Minister of Finance Regulation Number 36/PMK.03/2007 on the Limitation of Simple House, Very Simple House, Simple Condominium, Pondok Boro, Student Dormitory, and other houses, which is based on Delivery is Exempted from Value Added Tax; Simple Condominium which is exempted from Value Added Tax is a multistory building which is built in an environment that used as a dwelling place which is equipped with bathroom (WC) and kitchen either united with dwelling or separate unit with communal usage, which is the acquisition in cash or financed through subsidized or not subsidized credit facility, which meet the following conditions: a. the selling price of each dwelling include condominium is not more than Rp 75,000,000.00 (seventy five million rupiahs); b. building area of each dwelling is not more than 21 m2 (twenty-one square meter); c. the construction refers to the Minister of Public Work Regulation which manages the Technical Requirement of Condominium’s Construction, and d. It is the first residential unit that is owned, used alone as a residence and is not transferable within 5 (five) years since it is owned. 3. For Simple Ownership Condominium (Rumah Susun Sederhana Milik/ Rusunami) Under The Minister of Finance Regulation Number 155/KMK.03/2001 on the Implementation of Value Added Tax which is exempted on Import and/or Delivery of Certain Taxable Goods that is Strategic, as amended by Minister of Finance Regulation Number 363/KMK.03/2002, as amended by Minister of Finance Regulation Number 371/KMK.03/2003, as amended by Minister of Finance Regulation Number 11/PMK.03/2007, as amended by Minister of Finance Regulation Number 31/PMK.03/2008 on the Fourth Amendment of Minister of Finance Regulation Number 155/KMK.03/2001 on the Implementation of Value Added Tax which is exempted on Import and/or Delivery of Certain Taxable Goods that is Strategic; Simple Ownership Condominium is a multistory building which is built in an environment that used as a dwelling place which is equipped with bathroom (WC) and kitchen, either united with dwelling or separate unit with communal usage, which is the acquisition is financed through subsidized or not subsidized ownership house credit, which meet the following conditions: a. The area for each residence is more than 21 m2 and not more than 36 m2; b. The sale price for each residence is not more than Rp 144,000,000; c. It is intended for an individual person who has an income which is not more than Rp 4,500,000 per month and has had a Tax Identification Number (TIN); d. The construction refers to the Minister of Public Works Regulation on the technical requirement of simple condominium construction, and e. It is the first residence unit that is owned, used alone as a residence and is not transferred within a 5 years period of time since it is owned. 5. Sales Tax on Luxury Goods (Pajak Penjualan atas Barang Mewah/ PPnBM) Sales Tax on Luxury Goods is a tax which is imposed on the taxable luxury goods in the Customs Area (the Elucidation of Article 8 paragraph (2) of VAT Law). Under the Article 8 paragraph (1) of VAT Law, the Sales Tax on Luxury Goods tariff is set forth as the lowest of 10% (ten percent) and the highest of 200% (two hundred percent). The export of taxable luxury goods is imposed a tax with the 0% (zero percent) tariff. The Sales Tax on Luxury Goods tariff for luxury residential groups such as luxury house, apartment, condominium, town house, and a type similar to it is 20% (twenty percent). Sales Tax on Luxury Goods is imposed to only 1 (one) time when delivery of taxable luxury goods is performed by entrepreneur who produces or imports of taxable luxury goods. Under the Article 5 paragraph (1) of VAT Law, the Sales Tax on Luxury Goods is imposed to: a. delivery of taxable luxury goods which is performed by entrepreneur who produces the goods in the Customs Area in business or work activities; and b. import of taxable luxury goods. On delivery of taxable luxury goods by producer or on the import of taxable luxury goods, beside it is imposed a VAT, it is also imposed a Sales Tax on Luxury Goods on the consideration of: a. need a balance of taxation between low-income consumers and high-income consumers; b. need to control of consumption pattern of taxable luxury goods; c. need a protection of small or traditional producers; and d. need to secure a state revenue. Under the Minister of Finance Regulation Number 620/PMK.03/2004 on the Type of Taxable Luxury Goods besides motor vehicle which is imposed the Sales Tax on Luxury Goods, as amended by Minister of Finance Regulation Number 35/PMK.03/2008, as amended by Minister of Finance Regulation Number 137/PMK.011/2008, as amended by Minister of Finance Regulation Number 103/PMK.03/2009 on the Third Amendment of Minister of Finance Regulation Number 620/PMK.03/2004 on the Type of Taxable Luxury Goods besides motor vehicle which is imposed the Sales Tax on Luxury Goods, the Sales Tax on Luxury Goods in the form of: The restriction of the Sales Tax on Luxury Goods imposition is only imposed to the luxury residence groups such as luxury house, apartment, condominium, town house, and a type similar to it from non-condominium type with a building area of 350 m2 or more and from the type of condominium with a building area of 150 m2 or more. Alsha Alexandra Kartika
Under Article 1 number 6 of Government Regulation Number 24 of 1997 on Land Registration (“GR No. 24/1997″), physical data is the information of location, boundary and area of land and registered condominium unit, including information of building or part of building over it.
Whereas, under Article 1 number 7 of GR No. 24/1997, juridical data is the information of legal status of land and registered condominium unit, its right holder and other rights and other burdens which are burdening the land.
The requirement and procedure to obtain the information of physical data and juridical data is regulated in the Agrarian State Minister Regulation/Head of National Land Agency Number 3 of 1997 on the Implementation Provision of Government Regulation Number 24 of 1997 on Land Registration (“Agrarian State Minister Regulation No. 3/1997”).
Under Article 187 of Agrarian State Minister Regulation No. 3/1997, the information of physical data and juridical data in land registration map, land register, measure letter and land book are open to the public. The requirement to obtain information of physical data and juridical data of land is a written application by mentioning of its need, except the Information Letter of Land Registration (SKPT) which is granted for a certificate’s examination by Land Conveyancing Officer (Pejabat Pembuat Akta Tanah/ PPAT) does not need a written application. The information may also be granted to the interested parties by visually or in writing. If the information is granted in writing, then it shall be granted in the form of Information Letter of Land Registration (SKPT).
Under Article 191 of Agrarian State Minister Regulation No. 3/1997, the physical data and juridical data which are listed in the name’s list may only be granted to the Government agency which requires for implementing their duty. The procedure of its application is by submitting the application which states the related need. The application is fulfilled after it is approved by the Head of Land Agency.
Alsha Alexandra Kartika