Property – The new administration plans to remove PPN and BPHTB to boost low-income homeownership

Property – The new administration plans to remove PPN and BPHTB to boost low-income homeownership The Prabowo-Gibran administration has made the housing and property sector a key priority in its efforts to achieve its ambitious economic growth target of at least 8% per year. Central to this plan is the re-establishment of a dedicated housing ministry and a series of incentives aimed at building 3 mn affordable homes annually, or 15 million over five years. Hashim Djojohadikusumo, Chairman of the Housing Task Force, emphasized that low-income homebuyers (MBR) will receive tax incentives to alleviate their economic burden. Discussions with industry stakeholders have explored the possibility of temporarily eliminating VAT for one to three years. Currently, buyers face an 11% VAT (PPN) and a 5% land acquisition fee (BPHTB), while sellers are subject to a 5% income tax (PPh). The proposed plan aims to remove 16% of the total 21% tax burden to help reduce economic disparities. To offset the potential loss of state revenue from this tax break, Hashim mentioned the creation of a new Ministry of State Revenue to explore alternative income sources. Bonny Z. Minang, another member of the Housing Task Force, explained that the proposal to eliminate taxes for MBR homebuyers was inspired by developer requests during discussions on reviving the housing ministry. The task force believes that reducing taxes will incentivize developers to engage in the MBR market, driving the sector’s contribution to GDP. While the current focus is on the low-income segment, Bonny noted that discussions for tax adjustments for middle- and upper-income buyers may be considered in the future. (Source : Kontan) Comment : We view the proposed property sector stimulus may encounter challenges at the regional government level. This is because BPHTB, a regional tax levy, may require coordination with all 38 provinces through the Ministry of Home Affairs. Additionally, the plan is still tentative and awaits approval from the Ministry of Finance for implementation within the first 100 days of the newly elected president's term. Presently, the government remains focused on low-income people (MBR), prioritizing incentives in this sector. However, many large property issuers on the IDX do not target the subsidized housing market. Among them, only CTRA operates in this segment through its Citra Maja project in Banten.