Property - VAT incentives for house priced below IDR2 bn

Property - VAT incentives for house priced below IDR2 bn The government will introduce a VAT incentive program for new houses priced under IDR2 bn. The government will fully cover the Value Added Tax (VAT) for the new house purchased until Jun'24. After this period, the government will continue to provide a 50% VAT discount. In addition to the VAT assistance, the government is offering incentives to low-income individuals (MBR) to streamline the administrative processes associated with purchasing new homes. These incentives encompass various fees, including the BPHTB, with a total value of IDR4 mn. This program will remain in effect until 2024. Comment : We are positive on the news. However, it's unclear whether these incentives apply to only ready-for-sales inventory or could be applicable to newly launched houses. Compared with the previous VAT incentive in 2021, the impact of the new VAT incentives for the property companies may be limited due to lower ready-for-sales inventory levels compared to the 2021 level. However, if the incentives encompass the newly launched houses, it could substantially boost demand in the middle-middle and middle-low income segments (CTRA would be the biggest beneficiary).