The Government Increases the Price Threshold for Affordable Housing for Low-Income Individuals. This measure is outlined in Minister of Finance Regulation No. 60/2023.
The policy encompasses guidelines on the maximum selling price of subsidized housing, along with fiscal support in the form of an 11 percent exemption from value-added tax (VAT).
Febrio Kacaribu, the Head of the Fiscal Policy Agency at the Ministry of Finance, has expressed that the issuance of the new regulation aims to enhance the availability of affordable housing, facilitate financing access for low-income communities, uphold the affordability of habitable homes, and ensure the sustainability of programs and fiscal stability.
“The VAT exemption facility is intended to support the provision of at least 230,000 housing units for low-income individuals, as targeted by the Government,” stated Febrio in an official statement released on Friday (16/6/2023).
In accordance with Minister of Finance Regulation No. 60/2023, the government has raised the upper limit of the selling price for eligible subsidized landed houses, which qualify for VAT exemption, to a range of IDR 162 million to IDR 234 million for the year 2023.
Looking ahead to 2024, the price threshold will further increase to IDR 166 million to IDR 240 million, depending on the specific regional zones.
Previously, the maximum price limit for VAT-exempt landed houses ranged from IDR 150.5 million to IDR 219 million.
Febrio emphasized that the upward adjustment in the subsidized housing price threshold correlates with the average annual increase in construction costs, as reflected by the Wholesale Price Index at 2.7 percent.
In addition to the 11 percent VAT exemption, this provision can support the fulfillment of affordable and habitable housing for low-income communities. Furthermore, the VAT exemption facility will stimulate the national economy, including investments in the property sector and its auxiliary industries, job creation, and increased consumer spending.
This commitment aligns with the objectives outlined in the National Medium-Term Development Plan (RPJMN) 2020-2024, which aims to elevate access to habitable housing from 56.75 percent to 70 percent.
Among the fiscal instruments employed, the VAT exemption facility for public/landed houses and apartments has been in place since 2001.
Simultaneously, the Ministry of Public Works and Housing (PUPR) is currently preparing a Ministerial Decree (Kepmen) to regulate the implementation of the latest subsidized housing selling prices.
This measure is a direct response to the issuance of Minister of Finance Regulation No. 60/2023 on June 16, 2023, which encompasses guidelines on price thresholds and fiscal support through an 11 percent VAT exemption.
