PPh Article 4(2) in English: the final-tax list behind every Bali property tax

Why a villa sale is taxed at a flat percentage of the price, a lease at a flat percentage of the rent — and where those rates are allowed to come from.

Written from the Indonesian originals · Editor-reviewed · Law as read on 2026-10-10

By the balipropertyguide.com editorial team · Published 2026-10-10 · Last reviewed 2026-10-10 · 6 min read

6 primary sources cited on this page. How we check what is on this site

Article 4(2): the list that turns property income into a flat tax

Most property income in Indonesia is not taxed at the ordinary rates at all. Article 4(2) of the Income Tax Law lists income that may be taxed with a final tax, and a regulation for each item sets a flat rate on the gross amount. Every Bali property tax that is a percentage of a price or a rent comes through this door.

Article	What it decides	Used on
Income Tax Law art. 4(2)(d), as amended by Law 7/2021 art. 3	Final-taxable property income: income from transfers of land and/or buildings, construction services, real estate business, and rental of land and/or buildings.	—
Income Tax Law art. 4(2)(e), as amended by Law 7/2021 art. 3	Also: other certain income, including business income of taxpayers with a certain gross turnover.	PP 55/2022
Income Tax Law art. 4(2), closing words, as amended by Law 7/2021 art. 3	Each is regulated in or under a Government Regulation.	—
Income Tax Law art. 17(7), as amended by Law 7/2021 art. 3	The rate set by regulation must be not above the highest rate in art. 17(1).	—
PP 34/2016 art. 2(1)(a)	Sale of land or buildings: 2.5%.	PP 34/2016
PP 34/2017 art. 4(1)	Rent of land or buildings: 10% of the gross rent.	PP 34/2017
PP 55/2022 art. 56(2)	Small-business turnover: 0.5%.	—
Income Tax Law art. 26(2), as amended by Law 6/2023 art. 111	Non-residents' asset sales are taxed under art. 26(2) except income regulated in art. 4(2).	—

The list

Article 4(2) names bank interest and bonds; lottery prizes; share and securities transactions; transfers of land and/or buildings, construction services, real estate business and rental of land and/or buildings; and other certain income including business income of taxpayers with a certain gross turnover (Income Tax Law art. 4(2), as amended by Law 7/2021 art. 3), each regulated in or under a Government Regulation. For property the operative item is income from transfers of land and/or buildings, construction services, real estate business, and rental of land and/or buildings (Income Tax Law art. 4(2)(d), as amended by Law 7/2021 art. 3); for small businesses, other certain income, including business income of taxpayers with a certain gross turnover (Income Tax Law art. 4(2)(e), as amended by Law 7/2021 art. 3).

The law caps what the regulation can charge: a separate rate for article 4(2) income must be not above the highest rate in art. 17(1) (Income Tax Law art. 17(7), as amended by Law 7/2021 art. 3).

What the list replaces

Without article 4(2), rent and sale proceeds would simply be income. Article 4(1) already counts rent and other income from the use of property (Income Tax Law art. 4(1)(i), as amended by Law 7/2021 art. 3) and gains from the sale or transfer of property (Income Tax Law art. 4(1)(d), as amended by Law 7/2021 art. 3) as taxable, and the ordinary route is to add them to the year’s other income, deduct costs, and apply the rates. The final-tax route skips all of that: a percentage of the gross amount, collected at the time of the transaction. Two consequences follow, on our reading of the structure. A seller who makes a loss on a villa still pays the sale tax, because the base is the price, not the gain. And a landlord’s costs — repairs, the lease premium paid, financing — do not reduce the rent tax, because the base is the gross rent. Investors used to taxes on net gains should model Indonesian property on gross figures. The lease calculator.

The regulations made under it, for a Bali property

Event	Item in art. 4(2)	Regulation	Rate
Sale of land or a villa	(d) transfer of land and/or buildings	PP 34/2016 art. 2(1)(a)	2.5% of the gross value
Lease of land or a villa	(d) rental of land and/or buildings	PP 34/2017 art. 4(1)	10% of the gross rent
Small business turnover	(e) business income with a certain gross turnover	PP 55/2022 art. 56(2)	0.5% of turnover

Sources in the third column. Nightly accommodation is outside the rent item (PP 34/2017 art. 2(3)); the regional hotel-services tax is a different, regional tax at most 10% (Law 1/2022 (HKPD) art. 58(1)). The villa rental tax.

Final tax and the non-resident

Article 26 taxes a non-resident’s sale of assets in Indonesia at 20% of the estimated net income (Income Tax Law art. 26(2), as amended by Law 6/2023 art. 111) — except income regulated in art. 4(2) (Income Tax Law art. 26(2), as amended by Law 6/2023 art. 111). On our reading, a foreign seller of land or a building is taxed under the article 4(2) regulation, not under article 26(2). Rent is listed in both articles — article 26(1)(c) names royalties, rent and other income from the use of property — and which governs a payment to a non-resident landlord is a question for the regulation and an adviser; we do not settle it here. Article 26.

What the ordinary rates are, for comparison

Outside the list, individuals pay 5% to IDR 60m, 15% to IDR 250m, 25% to IDR 500m, 30% to IDR 5bn, and 35% above (Income Tax Law art. 17(1)(a), as amended by Law 7/2021 art. 3) and companies 22%, from tax year 2022 (Income Tax Law art. 17(1)(b), as amended by Law 7/2021 art. 3). The rates and residence rules.

Which law last wrote each article

Article	Subject	Last written by
2	Who is a taxpayer, residence, permanent establishment	Law 6/2023 art. 111
4	What income is, final-tax income, exempt income	Law 7/2021 art. 3
17	Rates	Law 7/2021 art. 3
26	Withholding on payments to non-residents	Law 6/2023 art. 111
31E	Rate cut for companies up to IDR 50bn turnover	Law 36/2008
32A	Tax treaties	Law 7/2021 art. 3

Law 36/2008 took effect on 1 January 2009 (Law 36/2008, closing article); Law 7/2021 was enacted on 29 October 2021 (Law 7/2021, signature block). There is no official consolidated text on JDIH BPK. Each article above is read in the amending law named, which reproduces it in full.

This is commentary, not tax advice.

Questions on this page

What is PPh Article 4(2)?

The list in the Income Tax Law of income that may be taxed with a final tax, at rates set by Government Regulation: interest, lottery prizes, securities, land and building transfers, construction, real estate business, rental of land and buildings, and certain other income including small-business turnover (art. 4(2), as amended by Law 7/2021).

What does 'final' mean?

The tax paid or withheld on the gross amount ends the liability on that income; it is not added to other income and taxed again at the art. 17 rates. That is our plain-English gloss; the law states the list and leaves the mechanics to each regulation.

Can the government set any rate it likes for final tax?

No higher than the top rate in art. 17(1) (art. 17(7)) — today 35% for individuals.

Does Article 4(2) apply to a foreigner selling a villa?

Art. 26(2), which taxes non-residents' sales of assets in Indonesia at 20% of estimated net income, expressly excludes income regulated in art. 4(2). A transfer of land or buildings falls under PP 34/2016 instead. Our reading of how the two articles meet.

Sources cited on this page

Every rule above was read in the Indonesian original on 20 September 2026, not from an English summary. How we check this.