PP 34/2016 in English: the seller's tax on a land or building transfer

2.5% of the value actually received, paid before the deed is signed, checked by the tax office, and required again at the land office. The regulation behind every Bali sale.

PP 34/2016, the articles a seller meets, in order

Every Bali sale that ends in a PPAT deed runs through this regulation before the deed is signed. It sets the income tax on the seller’s side of a land or building transfer: the rate, the base, the moment it has to be paid and who checks. The tax is final (PP 34/2016 art. 1(1)) — it is not added to the seller’s other income and reconciled at the end of the year; what is paid at the transfer is the tax.

The base: the price received, not the price in the advertisement

The rate is 2.5% of the gross transfer value (PP 34/2016 art. 2(1)(a)). Which value depends on who is selling to whom. Between strangers it is the value actually received (PP 34/2016 art. 2(2)(d)). Between related parties it is the value that should have been received (PP 34/2016 art. 2(2)(c)) — the tax office can look past the figure in the deed. For a gift, exchange or inheritance it is the market value that should have been received (PP 34/2016 art. 2(2)(e)).

That is the reason a low price in the deed is a poor saving. Writing a lower figure to reduce the seller’s tax also understates what the buyer paid, which is the buyer’s cost base when the buyer later sells, and it leaves a gap between the deed and the money that moved. The regulation does not make the deed price the tax base; it makes the price actually received the base.

Not only sales

A transfer here means sale, exchange, release or surrender of a right, auction, gift, inheritance, or any other way the parties agree (PP 34/2016 art. 1(2)). The exemptions are narrow: a small transfer by an individual below the tax-free income threshold transferring less than IDR 60 million (PP 34/2016 art. 6(a)); a gift to a blood relative one degree up or down the direct line and gifts to religious, educational and social bodies, cooperatives and small businesses (PP 34/2016 art. 6(b)); and inheritance, on which the tax is not owed on a transfer by inheritance (PP 34/2016 art. 6(d)).

The order of events: tax, then deed, then land office

The regulation puts three gates in a row. The seller pays before the deed is signed (PP 34/2016 art. 3(1)). The PPAT signs only on proof of payment checked by the tax office (PP 34/2016 art. 3(5)), and afterwards sends a monthly report of the deeds it signs to the Director General of Taxes (PP 34/2016 art. 3(6)). The land office issues a decision transferring the right only when the application includes the tax payment slip (PP 34/2016 art. 7).

For a buyer this matters more than it looks. If the seller has not paid, the deed cannot lawfully be signed, and if a deed is signed anyway the transfer stalls at the land office. Asking to see the seller’s payment slip, checked by the tax office, before the signing appointment is a reasonable request with a regulation behind it. The steps from PPJB to deed.

Off-plan: the tax follows the payments

A developer is treated differently. For a business whose main activity is transferring property, the tax is due on each payment received — down payments, interest and other charges included — and is paid by the 15th of the following month (PP 34/2016 art. 3(2)-(4)). And a PPJB is itself a taxable event: income from income from a PPJB and its amendments (PP 34/2016 art. 1(1)(b)). Selling a place in an off-plan project before completion — assigning the PPJB — is taxed on the buyer named before the change, the buyer named in the PPJB before the change (PP 34/2016 art. 5(1)).

What PP 34/2016 replaced, and what it leaves to others

It repealed PP 48/1994, as last amended by PP 71/2008 (PP 34/2016 art. 11) and came into force 30 days after promulgation on 8 August 2016 (PP 34/2016 art. 12). A guide that cites PP 48/1994 for the seller’s tax is citing a repealed regulation. The procedure — how the payment is verified, how the exemptions are claimed, what the PPAT reports — is delegated to a Finance Minister regulation (PP 34/2016 art. 9), which we have not read.

Two things this regulation is not. It is not the buyer’s tax: that is BPHTB, set by regional by-law under the 2022 law on regional taxes. And it is not a tax on leases: a lease is not a transfer of a land right, and rent is taxed under different rules that this site has not read. Both sides of a sale, and when each is paid.

This is commentary, not tax advice. A foreign seller's home-country tax is a separate question; we cover only the Indonesian side.

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