Tax Exemption in Jakarta Now Only Applies to One House Valued Below Rp 2 Billion

"Kemayoran: The Potential Smart City in Jakarta with Integrated Living and Business Areas" (photo: Eugenia Clara - Unsplash)

The Provincial Government of DKI Jakarta has introduced a new tax policy that could bring significant relief to many homeowners. Under this new regulation, the payment of Rural and Urban Land and Building Tax (PBB-P2) will be exempted for one house in Jakarta valued below Rp2 billion. This tax exemption move in Jakarta is designed to ease the financial burden on residents and support the local economy.

This new policy of Tax Exemption in Jakarta is detailed in Governor Regulation (Pergub) Number 16 of 2024, which serves as an implementation of Regional Regulation (Perda) Number 1 of 2024 on Regional Taxes and Levies. This regulation replaces the previous Pergub DKI Jakarta Number 23 of 2022, which provided PBB-P2 exemptions for all houses with a taxable value (NJOP) under Rp2 billion.

Lusiana Herawati, Head of the Regional Revenue Agency (Bapenda) of DKI Jakarta, explained the rationale behind this policy. She stated, “This initiative aims not only to alleviate the tax obligations of taxpayers but also to maintain the purchasing power of the community. It is crucial to ensure that the goal of maximizing regional tax revenues, particularly PBB-P2, is achieved.”

She further clarified that Governor Regulation Number 16 of 2024 was issued to enforce Regional Regulation Number 1 of 2024, aiming to foster fairness in the collection of Rural and Urban Land and Building Tax by refining the tax incentive formulation to be more targeted and effective.

“The essence of paying taxes is a form of mutual cooperation in restoring the economic condition of our beloved DKI Jakarta,” Lusiana emphasized in her statement on Wednesday (June 19, 2024).

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Local taxes are a vital source of revenue for the government, supporting various public services, including healthcare, education, and social services, which ultimately enhance public welfare and strengthen the regional economy. However, Lusiana acknowledged the burden that tax payments can place on residents.

“In an era of globalization and increasing competition, it is essential for local governments to maximize their tax potential to ensure the sustainability of various services to the community. These services ultimately improve public welfare and strengthen the regional economy,” she noted.

The new regulation also includes incentives for early PBB-P2 payments in 2024. According to Lusiana, there is a 10 percent discount on the principal amount for PBB-P2 payments from 2013-2024 made by August 31, and a 5 percent discount for payments made between September 1 and November 30, 2024.

Moreover, administrative sanctions will be waived entirely, with adjustments made in the regional tax management information system without requiring taxpayers to apply independently, and without the need for taxpayers to be free from other regional tax arrears.

“The administrative sanctions are waived entirely, and adjustments are made in the system without the need for taxpayers to apply independently. There is also no requirement for taxpayers to be free from other regional tax arrears,” Lusiana explained.

In 2023, the Regional Revenue Agency of DKI Jakarta reported regional tax revenues of Rp43.52 trillion, which included Rp9.41 trillion from motor vehicle taxes and Rp9.04 trillion from PBB-P2. This new tax policy is expected to further support the economic recovery of DKI Jakarta by easing the tax burden on residents and encouraging timely tax payments.