Building

Acquisition Levy of Right of Land and Building

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Background
As we all know, earth, water, and natural resources contained therein controlled by the State and used as much as possible for the prosperity of the people (society). Land and buildings that build on it, in addition to fulfill the basic need, is also constitutes as profitable investment equipment. In other words, land and building have economic value. Therefore, it is reasonable that for those who obtained the right of land and the buildings to give some of the economic value that obtained, to the State through tax payments, especially Acquisition Levy of Right of Land and Building (“BPHTB”). BPHTB is now regulated in Law Number 21 of 1997 on Acquisition Levy of Right of Land and Building (“Law No.21/1997”), as amended by Law Number 20 of 2000 on Amendment of Law No.21/1997 (“Law No.20/2000”).

BPHTB
According to Law No.20/2000, it is stated that BPHTB taxes are imposed on the acquisition of rights of land and/or building. The subject of BPHTB is the individual or entity who obtained rights of land and/or building. The object of BPHTB is associated with the obtainment of right of land and/or building. The obtainment of right of land and/or building consists of:
a. transfer of right due to: sale and purchase, exchange, grant, grant bequest, inheritance, income in the company or other legal entity, resulted in the separation of rights of passage, the appointment of buyers in the auction, the implementation of judgments that have permanent legal force, mergers, consolidation business, business expansion and gifts.
b. conferral of new right due to the continuation of releasing of right, and other than releasing of right.
The rights of land that are subject to BPHTB are Right of Ownership, Right to Cultivate, Right to Build, Right of Use, Right of Ownership on Strata Title, and Right to Manage.
The taxable objects which are exempted from BPHTB shall be the taxable objects that are obtained by:
a. diplomatic representative, consulate based on reciprocal principle;
b. state for performing governmental duties and or development activity for public interests;
c. international organization or representatives of international organization as stipulated by the Minister Decree provided that they neither run business nor do other activities other than their functions and duties;
d. individual or entity due to right conversion or due to other legal acts without any change of name;
e. individual or entity due to endowments;
f. individual or entity for religious service usage.

Acquisition Value
According to Article 5 of Law No.21/1997, the tax rate of BPHTB is in the amount of 5% (five percent) of Acquisition Value of Taxable Object (“NPOPKP”). NPOPKP is the acquisition value of tax object (“NPOP”) reduced with the Acquisition Value of Non-Taxable Object (“NPOPTKP”).
The base of BPHTB imposement is the NPOP. BPHTB is applied for the transaction that exceeds the NPOPTKP, in which is determined regionally, with the maximum amount of Rp 60.000.000,- (sixty million Rupiah), with the exception of the acquisition of rights due to inheritance, gift, bequest which received by person/individual in the direct lineage one degree up or down with the grantor, including husband or wife, in which that the NPOPTKP is regionally determined with the maximum amount of Rp 300.000.000,- (three hundred million Rupiah).
The amount payable of BPHTB is calculated by multiplying the tax rate of BPHTB with NPOPKP.

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The Legal Aspect and The Rules of The Right to Build

Background

Nowadays, there are various kind of companies established in Indonesia. In term of construction, these companies require a building located on a land. Therefore, according to Law Number 5 of 1960 on the Principle Provisions of Agrarian, there are several rights over land. One of these rights over land is the right to build which can be defined as the right to establish and own a building on a land. The Government Regulation Number 40 of 1996 develops and improves this right to build. The right to build can be given or imposed on state land, land submitted to the right of management, and land submitted to the right of ownership. The right to build can also be used as collateral for loans pledged with mortgage rights.

Allocation of Right to Build

According to the Article 19 of the Government Regulation Number 40 of 1996 describes that right to build is given to Indonesian citizen and legal entities established under Indonesian law and domiciled in Indonesia. The right to build isn’t given to foreigners and foreign entities, so according to article 39 of the Government Regulation Number 40 of 1996 for foreigners and foreign entities, they only have the right to use. The right to build can be granted for a period of 30 years and can be extended for another 20 years. The right to build is given by a decision of the Minister or by an officer appointed upon the recommendation of the management right holders, and have been registered in the book of land in the land office.

Obligations of Holders of Right to Build

The holder of the right to build has to:

to pay money of which amount and terms of payment are specified in the decision , use the land in accordance with its allocation and requirements as stipulated in the decisions and its agreements;
preserve both land and existing building and preserving the environment;
surrender the land back to the State, the holder of Right to Manage or holder of Right of Ownership after the Right to Build is expired;
deliver the certificate of Right to Build which has expired to the Head of the Land Office.

Assignment of the Right to Build

In article 34 Government Regulation Number 40 of 1996, it is mentioned that the Right to Build can be transferred to another party, through a sale and purchase, exchange, capital investment, grants, and inheritance.

Expiration of the Right to Build.

The Right to Build expires if its term ends, is terminated before the term has expired if any requirement is not fulfilled, released voluntarily by the holders of their rights before the the term has expired, is revoked for public purposes, if the land is abandoned or destroyed.

Isrilitha Pratami Puteri

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Condominium on the Land with Right to Build over the Land with Right of Management

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Background

Article 7 paragraph (1) and (2) of Law Number 16 of 1985 on Condominium, the developer (the “Developer”) may build a condominium over the land with Right of Management (Hak Pengelolaan) (“HPL”). HPL is a right to control, given by the state which the implementation is delegated to its holder. Rights of land that may be granted over the HPL land are Right to Build (Hak Guna Bangunan) (“HGB”) and Right of Use (Hak Pakai) (“HP”). The Developer is obligated to complete the HGB or HP status of the land prior to the initial offer of any property over the land, in accordance with the prevailing laws and regulation. Therefore, the Developer must be aware of the procedure of the obtaining of such rights and other requirements related to HGB and HP over HPL land, which is set out in the Government Regulation Number 40 of 1996 (“GR 40/1996”) and State Minister of Agrarian/Chief of National Land Agency Regulation Number 9 of 1999 on Procedure of the Granting of Rights of Land and Revocation of Right of State Land and Right of Management (“Regulation 9/1999”).

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Building Construction Permit in Jakarta

Building Construction Permit in Jakarta

Background

As the capital city of state of Indonesia, Special Capital Region of Jakarta (“Jakarta”) is a center of economic and trade center in Indonesia, which located in the west island of Java. Furthermore, as the central of government of Indonesia, Jakarta is also occupied by buildings that serve as the center of government offices, residential homes, and places of business. Aside to having been regulated on the laws and regulations on building structure establishment permit, and regulations pursuant to buildings and structures, buildings in the Jakarta area are specifically regulated in the Regulation of Jakarta Special Capital City Region Number 7 of 1991 on Building in the Special Capital City Region of Jakarta (“Regulation of DKI No. 7 of 1991”).

Building Construction Permit

The building constructions in Jakarta area can be conducted by firstly obtaining its permit from the Governor of the Special City Region of Jakarta (“Governor”), in the form of Building Construction Permit (“IMB”). The IMB application shall be made by written form to the Governor and submitted through the Section of Sub-District Office (Seksi Dinas Kecamatan) or Department of Sub-District Office (Suku Dinas Kecamatan). The Governor may refuse the IMB application, if the construction of building (i) is violating or harming the public interest, (ii) would harm the interest of local communities, such as endangering the health or environment harmony, and, (iii) has not perform the written instruction, as the condition of application process. The IMB shall be revoked, if the building construction has not been implemented within a period of 6 (six) months from the issuance of the permit, or in the event of the building construction is not continued, except it is notified by written notice by the permit holder.
Prior to the issuance of IMB, Section of Sub-District Office or Department of Sub-District Office may issue the Preliminary Permit (Izin Pendahuluan). Preliminary Permit is the permit which is given to build, accordance to the stages of building construction activities, while waiting the definitive permit. Preliminary Permit is specifically regulated in the Decision of Governor of the Special Capital City Region of Jakarta Number 76 of 2000 on the Procedures on Obtaining Building Construction Permit, Building Utilizing Permit (Izin Penggunaan Bangunan), and Building Utilize Feasibility (Kelayakan Menggunakan Bangunan), Governor Regulation of the Special Capital City Region of Jakarta Number 85 of 2006 on the Issuance Services of Building Construction Permit, Decision of Governor of the Special Capital City Region of Jakarta Number 147 of 2000 on the Delegation of Authority Service of Determination of City Plan and the Issuance of Preliminary Permit of Building Construction in the Province to Sub-District Office in Special Capital Region of Jakarta Province, as far as on the Issuance of Preliminary Permit on Building Construction.

Preliminary Permit is divided into 4 (four) parts, i.e. Preparation Preliminary Permit (Ijin Pendahuluan Persiapan), Comprehensive Preliminary Permit (Ijin Pendahuluan Menyeluruh), Comprehensive Structure Preliminary Permit (Ijin Pendahuluan Struktur Menyeluruh), and Foundation Preliminary Permit (Ijin Pendahuluan Pondasi).

Building Construction

Each building shall comply with the administrative and technical requirements in accordance with the function of the building. Having specifically regulated in the regional regulation of Jakarta, the technical and administrative requirements of building are also guided by other regulations on building structure, for example, Law Number 28 of 2002 on Building, Regulation of the State Ministerfor Public Works Number 24/PRT/M/2007 on Technical Guidelines for Building Construction Permit, Regulation of the State Minister for Public Works Number 29/PRT/M/2006 on Guidelines of the Technical Requirements of Building Structure, and Regulation of Minister of Home Affairs of Republic of Indonesia Number 32 of 2010 on Guidelines of the Issuance of Building Construction Permit.

The administrative requirements of the building consists of (i) the status of the rights of the land, (ii) the status of building ownership, and (iii) the IMB, while the technical requirements of the building contains, (i) the requirements of building structure, and (ii) the reliability requirements of building. The building construction in Jakarta area should be conducted by contractors and supervised by the Supervisory Director. The Supervisory Director is a person or a group of experts/entities which is charged to supervise the implementation of building construction activities upon the appointment of the building owner, in accordance with theprovision that is stipulated in the building permits. To perform their duties, Supervisory Director should have a work permit and responsible for the implementation of building construction activities.

Furthermore, having already supervised by Supervisory Director, all the construction activities in Jakarta area was also monitored by the Supervision Department of City Development (Dinas Pengawasan Pembangunan Kota). Supervisory Director of a building construction has an obligation to report each result of stage of its construction activities to the Head of Supervision Department of City Development. Each design and construction plan shall comply with the technical requirements, which also considering the security, safety, the suitability of building and environment from the side of architecture, construction, installation and building equipment, including safety on the fire prevention.

Design or building plan shall be made and accountable by the experts that have aduty to designing and planning the building and obtaining a written work permit from the Governor. Plan Drawing and Building Planning consists of (i) architectural drawing plan, and/or (ii) drawing and structural calculation, and/or (iii) drawing and its installation calculation and equipment of building, and/or, (iv) drawing and another calculation which have been fixed. The Expert who had a duty to design and plan the drawing and structure calculation, should had to adjust its drawing and structure calculation, and shall not deviate from the architectural drawing. The building owner is having an obligation to inform the Head of Supervision Department of City Development in case there are replacements of the designer and/or building planning.

Criminal Provisions

The violation of any provisions stipulated in Regulation of DKI No. 7 of 1991 is subject to the imprisonment with maximum 3 (three) months, or fine in amount up to IDR. 50,000 (fifty thousand Rupiah), by or by not seizing or confiscating the equipment, which has been used to commit the violations of the provisions. In addition to the penalties above-mentioned, Governor may determine penalties in order to penalize the violations.

Ivor Ignasio Pasaribu

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Legal Aspects of Building in Indonesia

Buildings are made to support people’s need of spaces. Building has many functions such as work space, business place, education place, recreation place and many more. In developing countries, especially for small countries, building is used to maximize the use of spaces.

In Indonesia, building is regulated in the Law No. 28 of 2002 on Building (“Law of Building”). According to Law of Building, the definition of building is a physical form of construction works which integrate with the land it stands on, partly or wholly stands over and/or under ground or water, having a function as a place for people to do their activities, either for residence or place to live, religious activity, business activity, sosial activity, culture or any specific activity.

Construction of building is held with the principle of utility, safety, balance, also the harmony between building with its environment. The regulation for building is intended for:
1. Materializing a functional building and suitable with the construction building order which is harmonious and balance with its environment;
2. Materializing an orderly execution of building that ensures technical reliability in terms of safety, health, comfort, and convenience.
3. Materializing a legal certainty in the execution of bulding.

As for building function, according to Paragraph 1 of Article 5 Law of Building, building functions consist of residential function, religious, business, social and cultural, as well as special function. Paragraph 7 of Article 5 stipulated that one building can have more than one function.

Basically, Law of Building is regulating the requirements of a good and fully functional building. As for the implementing regulation of Law of Building is Government Regulation No. 36 of 2005 on Implementing Regulation of Law No. 28 of 2002 on Building (“GR No.36 of 2005”).

The purpose of GR No. 38 of 2005 is to materialize the implementation of orderly buildings, both administratively and technically, in order to materialize a building that is functional, reliable, which ensures safety, health, comfort, and ease of use, and balance and in harmony with its surroundings.

Some of the provisions in GR No. 38 of 2005 still need guidance and technical standard as the guidance to construct buildings. To do so, Minister of Public Works issued the Minister of Public Works Regulation No. 29/PRT/M/2006 on Guidance on Building’s Technical Conditions (“Minister Regulation”). This regulation includes everyone so that every party, person, legal entity and also government body, in constructing building shall fulfil the technical conditions set out in the Minister Regulation.

Retno Anggraeni

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