TEMPO.CO, Jakarta - House prices are expected to rise in line with the increase in Value Added Tax or 12 percent VAT starting January 2025. Director General (Dirjen) of the Ministry of Public Works and Public Housing, Iwan Suprijanto, said that this potential increase is triggered by the increase in construction prices in line with the burden of VAT on the public.

"Yes, clearly, according to mathematics law, it will increase. VAT (increased) to 12 percent will increase (construction and house prices)," said Iwan when met at the Permanent Housing (Huntap) earthquake survivors in Cianjur, on Thursday, November 21, 2024.

Therefore, according to Iwan, the government will provide a number of incentives for the housing sector, including the Acquisition of Rights to Land and Buildings Tax (BPHTB) which is planned to be waived for low-income people or MBR.

Iwan explained that the abolition of BPHTB for MBR will be implemented through the issuance of a Joint Decree by 3 ministers, namely the Minister of Public Works and Public Housing, Minister of Home Affairs, and Minister of Public Works. Iwan also said that the government will continue the VAT Paid by the Government or PPN DTP incentive policy for the housing sector.

Previously, the increase in VAT rates from next year was announced by the Minister of Finance Sri Mulyani Indrawati in a working meeting with the House of Representatives' Commission XI last week. "There is already a law, we need to prepare so that it (12 percent VAT) can be implemented, but with a good explanation," she said at Senayan, on Wednesday, November 13, 2024.

In accordance with Law Number 7 of 2021 concerning Tax Regulations Harmonization (UU HPP), the government can gradually increase VAT by one percent. This tax increase had occurred in April 2022 to 11 percent and will increase again to 12 percent in 2025. The 12 percent VAT policy will cause an increase in the prices of goods and services as this tax is passed on to consumers.

Regarding its impact on the property sector, General Chairman of the Indonesian Real Estate Board (REI) Joko Suranto predicts that the 12 percent VAT will impact a decrease in sales trend. Because, the VAT increase will weaken people's purchasing power.

"There is a decline in this industrial sector (property) in terms of growth," said Joko at the REI Central Office, Jakarta, on Wednesday, November 20, 2024. "This means that it will also harm the government because this sector cannot provide contributions."

Joko also hopes that President Prabowo Subianto will continue the policy of providing VAT DTP for housing purchases. The 100 percent VAT DTP incentive policy signed during President Jokowi's era only applies until December 2024.

According to Joko, the VAT DTP incentive can help alleviate the burden on the community while increasing their purchasing power. Thus, he hopes that the 12 percent VAT policy will not deter people from buying houses. "Certainly, the VAT DTP contribution is significant to sales," said Joko.

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