In 2025, the Indonesian government has announced a significant move to stimulate the property market by writing off the 11% Value Added Tax (VAT) on new property purchases. This policy aims to make homeownership more accessible to the public, particularly for first-time buyers, by reducing the financial burden associated with purchasing property. The move is seen as a way to support the country's economic recovery post-pandemic and encourage investment in the real estate sector.
The exemption is expected to have a profound impact on the property business. Developers and real estate agents are likely to see an increase in demand, as the VAT removal makes new properties more affordable and attractive to potential buyers. This could lead to a boost in property sales, with both residential and commercial properties benefitting from the tax relief. It may also encourage more developers to launch new projects, seeing an opportunity to tap into a larger market of buyers.
However, the policy also raises questions about its long-term effects on the market. While it may drive immediate sales, there are concerns that the removal of VAT could reduce government revenue in the short term. Additionally, the property sector might experience inflationary pressures as demand increases. Overall, this policy is a bold step that could reshape the real estate landscape in Indonesia, but its true impact will unfold over time as the market adjusts to the new tax environment.
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