On 31 December 2025, the Minister of Finance (MoF) issued PMK-901 regarding Value Added Tax (VAT) incentives for landed houses and residential units. The Government has implemented this incentive since 2023 to maintain the sustainability of Indonesia's economic growth by stimulating people's purchasing power in the housing sector. PMK-90 extends the VAT incentive for landed houses and residential units to apply for VAT due in January to December 2026. The policy given under PMK-90 is similar to the previous PMK-13² and PMK-60³. Please refer to our TaxFlash No. 05/2025 for a discussion on PMK-13 and TaxFlash No. 13/2025 for a discussion on PMK-60.

Type of facility and facility period

The VAT due for eligible property will be 100% borne by the Government for all payments and properties handed over from 1 January 2026 to 31 December 2026.

Eligibility and requirements

The requirements for landed houses and residential units that are eligible for this VAT facility remain the same, namely:

1. The highest selling price is IDR5 billion
2. New landed houses and residential units:
   • Have obtained a house identity code from the application system provided by the Ministry of Public Works and Housing and this code must also be included in the minutes of the handover (Berita Acara Serah Terima/BAST) and on the VAT Invoice
   • Are delivered first-hand by a developer in a ready-to-use condition and have never been handed over previously

PMK-90 stipulates that BAST must also contain the selling price of landed houses and residential units, on top of other information as stipulated in the previous regulations. As with previous regulations, the incentive can only be used once on one eligible property per individual. An individual who has utilised similar VAT incentives for property prior to this regulation can still also utilise this incentive under PMK-90 for a different eligible property.

This PMK also stipulates that if an individual buys landed houses/residential units prior to 1 January 2026 but cancels the transaction, the individual will not be able to enjoy the VAT incentives according to the provisions in PMK-90 for the same landed houses/residential units. If the individual utilises this incentive on the cancelled transaction, the Tax Office can collect the VAT payable, although the mechanism is not specified in the regulation.

Administration

The VAT Invoice for the portion that is not eligible for the VAT borne by the government facility will use the transaction code of 04 instead of 01 following the new VAT rule. The handover and payment period requirements, as well as other administrative requirements for the seller, also remain the same.

On 31 December 2025, the MoF issued MoF Regulation No. PMK-105⁴ regarding Article 21 Income Tax on Certain Income Borne by the Government as Part of the 2026 Economic Stimulus to extend the same programme implemented in 2025 under PMK-10⁵ and PMK-72⁶. For more details, please refer to Tax Flash No.05/2025 for PMK-10 and Tax Flash No. 15/2025 for PMK-72.

Under PMK-105, the facility of Article 21 Income Tax borne by the Government will be valid for the period of January to December 2026.

The facility applies only to certain employees of specific employers engaged in designated business activities and holding a main Business Field Classification Code (Klasifikasi Lapangan Usaha/KLU) as listed in Appendix A of PMK-105.

Additionally, PMK-105 specifies that the KLU must be registered in the Directorate General of Taxes (DGT) database as of:

• 1 January 2026 – for taxpayers registered before this date
• The employer’s registration date – for taxpayers newly registered

The eligibility criteria, requirements, and administration procedures for industries stipulated in PMK-105 remain unchanged from the previous regulations.

On 31 December 2025, the MoF issued Regulation No.PMK-1147 regarding the Income Tax treatment of aid, donations, including zakat or other religious donations and grants.

In general, PMK-114 revokes and consolidates several MoF regulations (namely PMK-245⁸, PMK-254⁹, PMK-761⁰, and PMK-901¹) as well as incorporates the provisions regulated under existing relevant government regulations, into a single regulation, to ensure consistency and alignment. Whilst most of the content is adopting the rules under the previous regulations, there are some noteworthy elaborations or changes as set out below.

1. Donation in the form of development costs of social infrastructure

Donation in the form of social infrastructure development costs are deductible from gross income. This cost refers to construction costs incurred to build facilities and infrastructure intended for public benefit and operated on a non-profit basis. PMK114 further specifies that this construction costs also include renovation, restoration, and rehabilitation activities.

2. Zakat or other religious donations

a. Zakat or other religious donations made by corporate taxpayers Zakat or other religious donations with certain requirements are deductible. As it relates to religion, this is generally carried out by individuals. This PMK confirms that zakat or other religious donations paid by domestic corporate taxpayers is also deductible as long is the corporation are wholly or partially owned, either directly or indirectly, by adherents of religions recognized in Indonesia.

b. Zakat or religious donations cannot cause fiscal loss The payment of zakat or religious donations cannot cause fiscal loss in the tax year in which the zakat or religious donation is paid. If such payment causes a fiscal loss, the deductible amount is limited to the portion that does not create a loss in the relevant tax year.

c. Value determination of zakat or religious donations in-kinds Zakat or religious donations deductible from gross income may be paid or given in the form of money or in-kinds. PMK-114 stipulates that the value of such in-kinds originating from self-produced goods is determined based on the Cost of Goods Sold. This is consistent with the treatment of other types of donations.

d. Zakat or religious donations with employment relationship This PMK clarifies that if there is an employment relationship between the payor and the recipient, zakat or other religious donations remain exempt from Income Tax as long as the recipient is a zakat or other religious donation collection and management agency that is established or authorised by the Government.

3. Acquisition value for recipient under a qualifying condition where the donor/grantor is not required to conduct bookkeeping

Under the Income Tax Law, assets received from aid, donation, or grants that qualify for Income Tax exemption must be recorded by the recipient using the remaining fiscal book value. However, if the donor/grantor is not required to maintain bookkeeping, the value is determined by the DGT.

PMK-114 stipulates that in the latter situation where the donor/grantor is not required to maintain bookkeeping, the acquisition value for the recipient is the acquisition cost of the asset by the donor/grantor.

This has changed from provisions under the revoked PMK-90 stipulating that in the case where the donor/grantor is not required to maintain bookkeeping, the acquisition value for the recipient is official value for Land and Building (L&B) asset or the market value of non-L&B asset, at the time of transfer.

However, the provision under PMK-114 is partially similar to the provisions of KEP-11¹² stipulating that in the case where the donor/grantor is not required to maintain bookkeeping, the acquisition value for the recipient is:

• If the acquisition cost is known - the acquisition cost of the asset by the donor/grantor
• If the acquisition cost is unknown:
  • Oldest official value available for L&B asset
  • 60% of the market value at the time of transfer for non-L&B asset

4. Assets received through aid, donations, or grants can no longer be depreciated/amortised for tax purposes

Under PMK-114, depreciation or amortisation expenses on assets received through aid, donations, or grants are no longer tax deductible. This marks a change from the provisions under PMK-90, which allowed such expenses to be recognised through depreciation or amortisation for assets with a useful life of more than one year. Under the transitional provisions, the depreciation/amortisation of assets received prior to the effective date of this PMK, is no longer deductible starting 31 December 2025.