In Bali Home Immo we propose 3 types of properties, here is an explanation of the differences between them.

VILLA
Villas are freestanding and independent with a large landscaped garden and plenty of distance from the nearest neighbor. Compounds of complete amenities where you can enjoy the amenities privately and most of the time they offer a view like rice fields, ocean, beach, pool, garden.

TOWNHOUSE
Townhouses are usually built in a complex, which means that they are much more affordable than villas because they are in the city, and they don’t require expensive services such as garden or pool maintenance, constructed as a two- or three-story unit with a common wall or walls bordering the adjacent unit.

APARTMENTS
Apartments or flats (UK) are a set of rooms for living, in that are part of a larger building and are usually all on one floor. Logically much more affordable than the two previous types of properties, perfect for young student travelers or people traveling for business who do not need large spaces, you can also find luxury apartments that are actually expensive according to the fact that you cannot find a lot in Bali.

Buying property in Bali can be a great investment, whether for personal use or rental income. However, it is important to understand the taxes that come with property ownership.

This article explains the taxes involved when purchasing property in Bali. The information is based on Indonesian law and trusted sources to ensure accuracy and transparency.

1. Acquisition Tax (BPHTB - Bea Perolehan Hak atas Tanah dan Bangunan) 

When buying property in Bali, the buyer must pay the Acquisition Duty of Rights on Land and Buildings (BPHTB). This is a one-time tax paid when ownership of land or a building is transferred. It applies only to freehold transactions, where legal ownership of the land and building is transferred from the seller to the buyer.

• Tax Rate: 5% of the purchase price or the government-assessed value, whichever is higher.
   
• Who Pays? The buyer.
   
• When to Pay? After signing the sale deed (AJB), but upon applying the ownership transfer to the land office (BPN).
   

Example Calculation:
If a buyer purchases a villa for IDR 5 billion, the BPHTB would be:
5% of IDR 5 billion = IDR 250 million.

2. Annual Land and Building Tax (PBB - Pajak Bumi dan Bangunan)

After acquiring property, owners are required to pay an annual Land and Building Tax (PBB). This tax applies to both residential and commercial properties.

• Tax Rate: The rate varies from up to 0.5%, depending on the assessed value of the property.
• Who Pays? The property owner is responsible for this tax.
• Payment Process: The tax is payable once per year and must be settled before the due date to avoid penalties.

3. Value Added Tax (VAT - Pajak Pertambahan Nilai / PPN)

In some transactions, the buyer may be required to pay Value Added Tax (VAT), also known as PPN. This tax applies primarily to properties purchased from developers rather than private individuals.

• Tax Rate: The standard VAT rate in Indonesia is currently 11% but is set to increase to 12% in 2025.
• Who Pays? The buyer is responsible for this tax if the seller is a legal entity, such as a developer or a registered business (PT).
• Payment Process: VAT is collected by the seller and paid to the Indonesian tax office.

4. Income Tax on Property Sales (PPh Final - Pajak Penghasilan Final)

For Freehold Transactions

If a freehold property is sold, the seller is required to pay a Final Income Tax (PPh Final) on the transaction.

• Tax Rate: 2.5% of the agreed sale price (not the NJOP).
   
• Who Pays? The seller.
   
• When to Pay? The tax is usually paid after signing the Sale and Purchase Deed (AJB), but before the transfer of ownership is processed at the land office (BPN). The notary will typically require proof of payment to complete the ownership registration.
   

For Leasehold Transactions

For leasehold property sales, the rules are slightly different, because there is no transfer of land ownership, only the transfer of lease rights. While not considered a full property sale, leasehold transactions are still subject to income tax because they involve payment for the transfer of rights.

• Tax Rate: Also 2.5% of the total lease value paid by the buyer.
   
• Who Pays? The lessor/seller (the party granting or transferring the lease).
   
• When to Pay? Typically after signing the lease agreement (Deed of Leasehold Right) at the notary. Like in freehold transactions, the tax must be paid before the notary can officially register or record the lease transfer.
   

Important Note: In leasehold deals involving a foreigner leasing from a local owner, the income tax liability falls on the Indonesian individual or entity receiving the lease payment. The notary will calculate and withhold this tax at the time of signing.

5. Luxury Goods Tax (PPnBM - Pajak Penjualan atas Barang Mewah)

Certain high-value properties may be subject to an additional Luxury Goods Tax (PPnBM).

• Tax Rate: The rate varies but typically starts at 5% of the property’s transaction value.
• Who Pays? The buyer is responsible for this tax.
• Payment Process: This tax is assessed and paid at the time of purchase.

6. Rental Income Tax

For investors planning to rent out their property, rental income is subject to taxation.

• Tax Rates:
  • Indonesian tax residents: 10% of gross rental income.
  • Foreign (non-resident) investors: 20% of gross rental income.
  • Legal entity (PT PMA - foreign-owned company): 25% corporate tax on rental earnings.
• Who Pays? The property owner or registered business entity.
• Payment Process: Rental tax must be reported and paid annually.
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Example Calculation:
For a property generating IDR 1 billion per year in rental income:

• A foreign investor would pay 20% of IDR 1 billion = IDR 200 million in tax.
• An Indonesian tax resident would pay 10% of IDR 1 billion = IDR 100 million in tax.
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Tax Summary Table

Understanding the various taxes associated with purchasing and owning property in Bali is essential for any investor. Each tax obligation depends on factors such as property type, ownership structure, and intended use. By being aware of these taxes and their implications, investors can make informed decisions and ensure compliance with Indonesian regulations.

To avoid any legal or financial risks, it is highly recommended to consult with a qualified tax advisor or legal expert before proceeding with a property purchase in Bali.