DIGIVESTASI - The Value Added Tax (VAT) for building your own home without a contractor will increase from 2.2 percent to 2.4 percent starting next year. This increase is in line with the plan to increase the general VAT from 11 percent to 12 percent which will take effect from 2025, in accordance with Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP).

Article 7 of the HPP Law states that “The VAT rate of 12 percent will come into effect no later than January 1, 2025.” 

Currently, the VAT rate for building your own home is regulated in Minister of Finance Regulation (PMK) Number 61 of 2022. Under this regulation, the VAT rate for building your own home is 20 percent of the general VAT rate. With the VAT increase to 12 percent in 2025, the VAT rate for building your own home will be 2.4 percent.

Activities subject to VAT include new construction and expansion of existing buildings, but only for buildings with certain criteria, namely:

1. The main construction consists of wood, concrete, masonry, steel, or similar materials;
2. Used for residence or business activities;
3. Has a minimum area of 200 square meters.

People who want to build a house with an area under 200 square meters will not be subject to VAT.

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