The Indonesian government has revised its luxury goods tax policy for luxury property making Bali, Indonesia's top tourist destination, even more attractive to overseas buyers.
Previously, apartments with a selling price of at least IDR 10 billion ($700,000) and houses with a selling price of at least $1.4m were subject to a 20% luxury goods tax. The latest revision has now raised the minimum price of the property to $2.1m for all types of property.
"This is a big change," said Georg Chmiel, executive chairman at Juwai.com, a Chinese website for buyers overseas property. "Foreigners have the right to possess property for up to 80 years and are much less likely to pay 20% sales tax when selling. We expect demand to increase," he told SCMP.
We understand places like Bali, Batam and Lombok have a lot of foreign property owners"
The relaxed rules reflect Widodo's goal, who was re-elected for a second term in May, to attract more foreign investment into the country to fulfil his election promise to boost Indonesia's economic growth.
Property consultancy Savills reckons that the government's initiative to support the high-end segment will benefit the property market in Bali.
"We understand places like Bali, Batam and Lombok have a lot of foreign property owners," said Anton Sitorus, director and head of research and consultancy at Savills Indonesia. [Bali is attractive because of its] low price, natural beauty and quality of developments that are comparable to other popular places like Phuket and Koh Samui [in Thailand]."
Ignez Kemalawarta, deputy general chairman of Real Estate Indonesia (REI), told Indonesia Investments that the luxury property market of Indonesia has been sluggish since 2017 - when the Indonesian government introduced the 20% luxury tax for luxury properties in an effort to curb upward spiraling prices - as developers have been focusing on projects that come under the luxury tax threshold. He therefore expects to see a boost in the high-end market due to the revision.
Under Indonesian rules, only foreigners who have a special permit to work or stay in Indonesia are allowed to buy property in the country, but those who use a nominee or register a company in the country can also buy real estate, and Bali is high on their list.