Levy on the Acquisition of Land and Building Rights (the “BPHTB”) is a levy which is imposed to the individual or entity for any acquisition of right over land and/or building. Generally speaking, the BPHTB was originally regulated under Law Number 21 of 1997 concerning Duty on the Acquisition of Land and Building Rights as amended by Law Number 20 of 2000 but later revoked under Regional Tax Law. Regional Tax Law stipulates that any acquisition of the right over land and/or building, either resulted from the transfer of right or the granting of a new right, is determined as the taxable object. One event that transfers the right of the land and/or building is a sale and purchase. For the acquisition of land and/or building right which is conducted through sale and purchase, the BPHTB is payable when the deed of sale and purchase is made and shall be paid by the buyer as the party who obtains the right over land and/or building.
The practice of the sale and purchase of land and/or building in DKI Jakarta is often arranged by the developer and the buyer with the conditional sale and purchase agreement (the “PPJB”) prior to the execution of the deed of sale and purchase. Therefore, the Governor of DKI Jakarta visualizes that it is necessary to collect the BPHTB over the PPJB in order to avoid tax evasion.
Against those backdrop, this article examines systematically on the payment of the BPHTB over the PPJB as regulated under the Governor of DKI Jakarta Regulation Number 117 of 2019 Concerning the Payment of the Duty on the Acquisition of Land and Building Rights over Conditional Sale and Purchase Agreement (“GovReg No.117/2019”).
PPJB Criteria and the BPHTB Payment
From the definition of PPJB provided under GovReg No.117/2019, it is understood that the PPJB:
- consists of 2 (two) parties which are the seller and the buyer;
- constitutes a consent of the parties to conduct sale and purchase;
- the object of the sale and purchase is a house or condominium unit (either functions as a residence or non-residence);
- is conducted (i) prior to the construction of condominium, or (ii) during the construction of the detached house or row houses; and
- is drawn up in notarial deed.
The payment of BPHTB over PPJB shall be made by the seller during the signing of the PPJB or during the handover of the keys from the seller to the buyer. However, the seller is not per se be obliged to pay the BPHTB for every PPJB made by the seller. The payment of the BPHTB shall be paid by the seller if the following requirements are fulfilled:
- the object of the PPJB is completely built;
- the BPHTB is included as the component of the transaction price; and
- the seller has paid the down payment in full or has fully paid its payment obligations for the object of PPJB.
The Calculation of BPHTB
The payment of BPHTB by the seller is calculated based on the transaction price as stipulated under the PPJB. Such payment is recognized as the regional tax credit for the buyer. As we have established earlier in the Background of this article, the buyer shall provide proof of payment of the BPHTB prior to the signing of the deed of sale and purchase based on the acquisition value of the taxable object. When the PPJB is proceeded into the deed of sale and purchase, the amount of the BPHTB paid by the seller shall be taken into account in the calculation of the amount of BPHTB which shall be paid by the buyer.
Tax Refund and Compensation
If the transaction of the PPJB is cancelled, the buyer might apply for the refund or compensation for the BPHTB that has been deposited. However, it should be understood that such refund or compensation shall only be requested prior to the signing of the deed of sale and purchase.
The application for the refund or compensation shall be requested in writing to the Head of Regional Tax and Retribution Service Unit by attaching:
- the copy of the transaction cancellation deed from the notary;
- the copy of the identity of the seller and the buyer or its authorized;
- the power of attorney;
- the copy of the relevant PPJB;
- the BPHTB payment slip;
- the bank account number of the buyer; and
- the proof of the transfer or the proof of the payment refund of the PPJB object.
If the above mentioned requirements are completed, the Head of Head of Regional Tax and Retribution Service Unit shall issue the notice of regional tax overpayment assessment.
The seller is the taxpayer for the BPHTB payment over PPJB under the GovReg No.117/2019. Therefore, if the seller who has received the component of BPHTB payment from the buyer and does not pay to the Regional Government of DKI Jakarta, then the seller shall be imposed by an administrative sanction namely the penalty in the amount of 2% (two percent) monthly from the total amount of the outstanding BPHTB.