Income tax on land sales

JAKARTA (JP): Land offices throughout the country have been instructed to reject the registration of the transfer of land- title ownership if the seller has not yet paid income tax on the sale.

State Minister for Agrarian Affairs Soni Harsono issued the instruction to enforce Government Regulation No.3/1994 which imposes a three percent capital gains (income) tax on the sales of land and properties valued in excess of Rp 60 million (US$27,700).

The minister also has instructed land notary publics not to issue land and property sales deeds whenever the seller has not yet paid the capital gains tax amounting to three percent of the sales value.

Director General of Tax Fuad Bawazier ruled in a directive on May 31 that the capital gains tax shall be collected from land and property sales transactions concluded after June 1, 1994.

Excluded from the tax are real estate or property developers whose main businesses are developing land and property for sale to the public.(vin)