DGT Clarifies Tax Issue on Rental Properties from 2027
JAKARTA, DDTCNews - The Directorate General of Taxes (DGT) has confirmed that income tax on income from rental properties is not a new type of tax to be introduced from 2027. This topic is among the reviews covered by national media today, Tuesday (18/8/2026).
Dian Anggraeni, a Senior Tax Instructor at the Central Jakarta DGT Regional Office, stated that income from the rent of land and/or buildings has been subject to final income tax under Government Regulation (Gov. Reg.) 34/2017, which has been in force since 2 January 2018.
“When we talk about tax on rental properties, it is nothing new. It has been in effect since 2018, regulated under Gov. Reg. 34/2017. Income from the rent of land and/or buildings is subject to final income tax,” she said.
She confirmed that there is no special programme at the DGT to pursue rental property owners in 2027. Nevertheless, income derived from the rent of land and/or buildings has long been an income tax object.
Pursuant to Article 4 of Gov. Reg. 34/2017, income from the rent of land and/or buildings is subject to final income tax at a rate of 10% of the gross amount of the rent value. The gross amount of the rent value comprises the entire sum paid or recognised as a liability by the tenant.
That sum also includes maintenance, upkeep, security, service and other facilities costs, whether the agreement for these is entered into separately or consolidated with the rent agreement.
Given that income tax is levied on the gross amount and is final in nature, Dian added, costs incurred by the owner (for example, maintenance costs and land and building tax) cannot be deducted from the tax base.
Furthermore, income from accommodation services together with their lodging facilities is excluded from the imposition of final income tax on the rent of land and/or buildings under Gov. Reg. 34/2017. This exclusion covers, among others, hotels, lodging houses, dormitories and boarding houses.
Dian emphasised that the exclusion of boarding houses from the final income tax on the rent of land and/or buildings is not related to the imposition of certain goods and services tax (pajak barang dan jasa tertentu/PBJT in Indonesian) by local governments.
In her view, income tax and the certain goods and services tax operate under different tax regimes. Income tax is levied on income received or accrued by a taxpayer, whereas the certain goods and services tax is imposed on the consumption of certain goods and/or services and is charged to the consumer.
“They should not be conflated. Boarding houses are not subject to the 10% final income tax not because they are objects of the certain goods and services tax. They are not. When we discuss Gov. Reg. 34/2017, we are discussing income tax,” she said.
Therefore, exclusion from the 10% final rental income tax does not imply that income from boarding houses is exempt from income tax. Such income remains an income tax object as per the taxation scheme applicable to business income.
Individual taxpayers who fulfil the requirements may use the MSME final income tax rate of 0.5% if their gross business turnover does not exceed IDR4.8 billion in one tax year. The fraction of an individual taxpayer's gross business turnover up to IDR500 million in one tax year is not subject to income tax.
In addition to the above topic, there are reviews on the importance of managing Indonesia's financial centre independently. There are also discussions on the commodity exchange, 2027 tax revenues, an increase in transfers to regions budget and other matters.
Here is a full review of the tax articles.
Rental Property Owners Can Clarify via SP2DK
Dian Anggraeni, Senior Tax Instructor at the Central Jakarta DGT Regional Office, advised rental property owners to re-inventory all their rental income sources. Owners also need to ensure that final income tax has been withheld by the tenant or remitted via self-remittance if the tenant is not a withholding agent.
Should they receive a letter of inquiry (surat permintaan penjelasan atas data dan/atau keterangan/SP2DK in Indonesian), taxpayers may provide an explanation according to the actual conditions. The SP2DK is, in principle, a request for clarification regarding data held by the DJP.
Dian added that the DGT has obtained data from various government agencies, institutions, associations and other parties (instansi, lembaga, asosiasi, dan pihak lain/ILAP in Indonesian). With Coretax, data obtained from these various parties is increasingly integrated and can be utilised to support taxpayer compliance supervision. (DDTCNews)
Government Seeks to Establish Commodity Exchange to Set Prices
The government has decided to establish a mineral and strategic commodity exchange as a continuation of the implementation of a single-door export policy through PT Danantara Sumberdaya Indonesia (DSI).
President Prabowo Subianto stated that Indonesia is one of the main manufacturers of several commodities. Yet Indonesia does not participate in the price setting of those commodities, as pricing is instead determined in other countries.
"Those who do not have these commodities — how can they determine the price of those commodities? This makes no sense. I do not understand where this kind of economics is taught. We have the goods, yet others set the price," he said. (DDTCNews)
Establishment of IIFC Refined, Rosan Stresses Independent Management
The government is still thoroughly preparing the construction plans, governance and operations of the Indonesia International Financial Centre (IIFC).
Danantara CEO, Rosan Roeslani, stated that all preparations are aimed at ensuring Indonesia's financial centre has credibility and is capable of attracting major investors when it begins operations as well as being managed independently.
"This requires sound and thorough planning to enable the IIFC to earn the trust of investors and family offices, of which we once invited 110 [parties]," he claimed. (DDTCNews)
Concrete Measures Required to Boost Tax Revenues
The government's target to reduce the fiscal deficit next year is considered sufficiently realistic, provided there are concrete measures to increase revenue from taxation and that fiscal discipline is maintained.
In the Financial Note and draft state budget (rancangan anggaran penerimaan dan belanja negara/RAPBN in Indonesian) 2027, the government has set a target to reduce the fiscal deficit to 2.4% of GDP. This is a considerable reduction, given that the government projects the 2026 state budget deficit to reach 2.85% of GDP.
However, according to a number of economists, next year's target remains achievable provided the government applies strict fiscal discipline. (Bisnis Indonesia)
Responding to Prabowo's Speech, SBY: Safeguard Our Fiscal Health
The 6th President of the Republic of Indonesia, Susilo Bambang Yudhoyono (SBY), urged the government of President Prabowo Subianto to consistently maintain fiscal soundness. In his view, the government must ensure that the development agenda outlined in the state address is implemented consistently, including by maintaining fiscal conditions.
"I simply wish to convey to those serving in government to remain consistent, to truly safeguard our fiscal soundness and then to ensure sound implementation," said SBY in a video uploaded to his personal YouTube account.
For reference, in the draft state budget 2027, the government has proposed a state revenue target of IDR3,426 trillion, whilst state expenditure is set at IDR4,097.2 trillion. With this fiscal framework, next year's budget deficit is set at IDR671.2 trillion, or 2.4% of GDP. (DDTCNews)
Transfers to Regions Budget to be Increased Next Year
The government will increase the transfers to regions (transfer ke daerah/TKD in Indonesian) budget in 2027 to IDR735 trillion, which is higher than the 2026 state budget ceiling of IDR696.9 trillion.
"In 2027, it is planned at IDR735 trillion, an increase of 5.5% from the 2026 outlook of IDR696.9 trillion," said the Minister of Finance, Purbaya Yudhi Sadewa, at the press conference for the Financial Note and draft state budget 2027.
Purbaya stated that the TKD budget plan in the draft state budget 2027 excludes disaster reconstruction funds set aside for regions affected by natural disasters. (Kontan)
