Real Estate 2021

Last Updated April 13, 2021


Law and Practice


Walalangi & Partners (in association with Nishimura & Asahi) is a corporate and business law firm with a strong commitment and dedication to assisting and working together with clients to achieve their corporate and commercial goals in Indonesia. W&P operates in full association with Nishimura & Asahi (N&A), which is Japan’s largest full-service international law firm and has more than 600 lawyers working in close collaboration in 18 offices around the world, to offer unrivalled one-stop legal services. W&P is made up of 26 fee earners, three partners and two counsels.

The basic source of law for real estate in Indonesia is the Agrarian Law No 5 of 1960, which is supplemented and implemented through various implementing regulations, as explained below.

In relation to land titles, the Agrarian Law was supplemented by Law No 11 of 2020 on Job Creation (the Omnibus Law), and implemented by numerous regulations, including:

  • Government Regulation No 18 of 2021 on Management Right (Hak Pengelolaan), Land Titles, Strata Title, and Land Registration (GR 18/2021);
  • Government Regulation No 43 of 2001 on the Settlement of Inconsistency of Spatial Plan, Forestry Area, Licences, and/or Land Titles; and
  • Minister of Agrarian Affairs and Zoning/Head of the National Land Agency Regulation No 9 of 2019 on the Electronic Integration of Mortgage Services.

In relation to real estate, the Agrarian Law was supplemented by Law No 1 of 2011 on Housing and Settlement Areas, Law No 20 of 2011 on Apartments (the Apartment Law) and the Omnibus Law, which amendments were then implemented by various operating regulations, including:

  • Government Regulation No 21 of 2001 on the Implementation of Spatial Plans (GR 21/2021);
  • Government Regulation No 16 of 2021 on the Implementation Regulation of Law No 28 of 2002 on Building;
  • Government Regulation No 13 of 2021 on the Implementation of Apartments;
  • Government Regulation No 12 of 2001 on the Amendment to Government Regulation No 14 of 2016 on the Implementation of Housing and Housing Areas;
  • Presidential Regulation No 9 of 2021 on the Housing Development Acceleration Board; and
  • Government Regulation No 14 of 2001 on the Amendment to Government Regulation No 22 of 2020 on the Implementing Regulation of Law No 2 of 2017 on Construction Services.

The COVID-19 pandemic has adversely affected Indonesia’s real property sector, with the Indonesian Central Bank reporting that real estate prices fell by 0.2% in 2020, and that residential property sales plummeted by 30.9% from a year earlier in Q3 2020, following year-on-year declines of 25.6% in Q2 and 43.2% in Q1.

However, this has allowed foreign investors to be more aggressive in their land acquisition plans, especially in the last quarter of 2020, with some major investors in real property sectors implementing their major projects pipeline that had been postponed at the beginning of the COVID-19 outbreak. One of the most significant real property deals in 2020 was the development of the biggest (and first of its kind) advance smart and sustainable Transit-Oriented Development (TOD), in BSD City, South Tangerang, Greater Jakarta, which transforms hundreds of hectares of greenfield land into TODs comprising residential units, commercial properties, living amenities, green-park offices, digital hubs, a convention centre, a hospital, schools, railways and public transport nodes.

The government has also introduced some “relaxations” for the real estate sector during the pandemic, including the following:

  • a longer extension period for the submission of land title applications;
  • the simplification of procedures for land and property tax payment validation; and
  • the implementation of the electronic registration, assignment, rectification, amendment and deregistration of mortgages (e-mortgage).

Disruptive technologies have not had a significant impact on the real estate sector in Indonesia. One of the factors is that the main source of financing (particularly for real property customers) still largely depends on the conventional financing method typically provided by major banks, with strict and heavy requirements.

However, there has been increased interest in the development of smart urban facilities, including non-fuel mass battery-based electric commuting vehicles within residential and commercial areas and the utilisation of artificial intelligence equipment for the enhancement of digital marketing of commercial tenants.

Through the Omnibus Law and its first batch of implementing regulations issued in early 2021, the government has introduced certain relaxations and greater conveniences in land-related matters, including by:

  • allowing qualified foreigners to own strata-title units built upon land with Right to Build (Hak Guna Bangunan – HGB) located in specific permitted areas;
  • recognising land titles for space below the land surface; and
  • allowing the granting of HGB titles for apartments/flats with an initial validity period and an advance period in advance, causing the holder to effectively hold an HGB title for a longer period.

However, the implementation of these rules, is still subject to the issuance of operative regulations and guidelines, as well as practical policies by the inter-sectoral government authorities.

The most common land/property titles recognised under Indonesian Law related to real estate developments are as follows.

  • A right of ownership (Hak Milik) or freehold gives the holder the fullest right a person can possess over land in Indonesia for an unlimited period. Only Indonesian citizens and certain limited Indonesian legal persons or entities are allowed to hold a Hak Milik.
  • An HGB allows its holder to construct buildings or facilities (as opposed to a right to cultivate (Hak Guna Usaha – HGU) land specifically intended for agricultural purposes). It is limited to a duration of 30 years, with a possible extension of 20 years and a renewal of another 30 years. An HGB may be held by Indonesian individuals and Indonesian legal entities, including foreign investment limited liability companies (known as PT PMA) and, in a designated area, a foreign individual is now allowed to own an HGB upon a strata title; previously, foreigners were only permitted to own strata-title properties on Hak Pakai titled land in Indonesia.
  • A right to use (Hak Pakai) authorises its holder to utilise land or to collect the products from such land. A Hak Pakai may be held by Indonesian citizens and Indonesian legal entities, as well as foreign citizens who reside in Indonesia. A Hak Pakai can be granted for a maximum period of 30 years, with a possible extension of 20 years and a renewal of 30 years.

Transfer of title of real property is governed by the Agrarian Law, the Apartment Law and the Omnibus Law, and their implementing regulations.

The transfer of title of certificated land is done by way of the seller and the purchaser signing an Indonesian language land sale and purchase deed (Akta Jual Beli – AJB) in front of an Indonesian authorised land deed official (Pejabat Pembuat Akta Tanah – PPAT) that has jurisdiction over the transacted land is located. Legally, the title is transferred once the AJB is signed by the parties. Following the signing of the AJB, the PPAT must register the transfer with the relevant land office registry (Badan Pertanahan Nasional – BPN) for recordation.

Title insurance is not yet a common practice in Indonesia.

Buyers typically engage a local lawyer to carry out due diligence over the seller and the target assets (eg, land and building document and licences, existing contracts). The process typically involves the following:

  • a site visit to the location of the property to physically confirm the condition of the surrounding area and interview the local neighbours to verify whether there are any issues with the property;
  • a land verification check with the relevant land office to confirm that there is no existing mortgage or dispute over the land; and
  • a court verification check with the relevant courts to confirm that there is no existing legal proceeding relating to the property.

In addition, the buyers also typically engage a tax/financial adviser to prepare a transaction structure that can optimise all tax and financial benefits and exemptions for the transacting parties, and an independent appraiser to conduct an assessment and appraisal of the target real estate value, which may be used by the buyer and the seller to determine the purchase price.

If there is any indication of environmental issues/potential liabilities relating to the location of the target real estate, buyers may also engage an independent environmental surveyor to conduct environmental due diligence over the land.

Due to the COVID-19 pandemic, most of the due diligence processes are now carried out through virtual data rooms and virtual meeting applications, although a small part still require physical attendance (eg, site visit/survey).

The basic representations and warranties typically provided by the seller in a sale of real estate cover the following:

  • the due incorporation and authorisation;
  • the valid ownership and registration of the real estate;
  • that the real estate is free and clear of encumbrance, confiscation and/or seizures;
  • that the real estate is free of environmental pollution/hazards;
  • that there is no third-party claim or unlawful occupancy;
  • that there is no outstanding tax or other payment due and payable by the seller with respect to the real estate; and
  • that there is no outstanding or potential dispute/litigation involving the seller and the real estate.

By law, the seller can be held liable for a loss suffered by the buyer as a direct result of the seller’s misrepresentation. Indonesian law also allows for the parties to contractually agree the scope of indemnification between the seller and the buyer.

Other important areas to be carefully observed and considered by an investor when purchasing real estate include the following:

  • investment rules, which set out the relevant investment licensing procedures, minimum capital and investment amount for PT PMA, as well as investment facilities;
  • zoning/spatial planning, to ensure the suitability of the target project location for the proposed real property business;
  • the environment; and
  • taxation.

Indonesian environmental laws adopt the “polluter pays” principle, which puts the environmental liability on the party that actually caused the environmental pollution/damage. If the buyer was not involved in causing the pollution or environmental contamination, including if the contamination was caused by the past actions of the previous owner, then the buyer should not be responsible for the soil pollution or environmental contamination merely by possessing a property in the location concerned.

In practice, a potential buyer should commission an assessment and testing of the soil, particularly if there is any indication of historical contamination, and should request specific indemnifications and liquidated damages from the seller for environmental contamination-related issues.

As part of the implementation of the simplified licensing procedures, all regional governments are now required to provide standardised data of detailed spatial plans in order to be integrated into the online single submission (OSS) system. This will help businesses to easily check whether their plan fits the target project location based on the particular region’s Spatial Plan (Rencana Detail Tata Ruang – RDTR). If it does, the OSS system will issue a "Conformity Confirmation" and subsequently the relevant Business Authorisations to authorise the implementation of the business activities.

In certain cases where the land is designated for the purpose of public use (eg, roads, airports, terminals, oil and gas infrastructure) under the national/regional spatial planning, it is possible for the government to take over certain parts of the land owned by private parties. The landowners will receive compensation for such expropriation, following this procedure:

  • the public institution (ie, representing the government) will prepare the land procurement plan;
  • data relating to the land, including the area and its owner, is collected;
  • the land procurement plan is communicated to the landowner, including in relation to settlement issues;
  • the land procurement is announced;
  • the land is valued by an independent assessor;
  • the compensation amount is negotiated; and
  • the land title is transferred.

If the landowner does not agree with the compensation amount, public institutions may consign the compensation to the relevant district court.

For an asset property deal, the general rule is that the seller is subject to income tax in the amount of 2.5% of the purchase price and the buyer is subject to the land and building acquisition duty (bea peralihan hak atas tanah – BPHTB) in the maximum amount of 5% of the purchase price, depending on the region where the land is located. If the seller is a taxable entrepreneur, there will be an additional 10% VAT and potential 20% luxury tax VAT if the transaction value meets a certain threshold.

For share property deals, the parties may have to take some corporate income/capital gain tax into account.       

Foreigners are not allowed to hold a freehold right (hak milik).

However, an Indonesian foreign investment company (PT PMA) is allowed to hold other general land titles, such as HGB, HGU and Hak Pakai.

The source of financing varies (eg, loans, bank loans, capital markets, financial institutions), depending on the type of transaction. Individual housing transactions are typically funded by bank loans, while long-term construction and property development projects are typically funded by the combination of joint venture equity and bank loans, and, in some cases, real estate funds.

There are several various classifications of security, depending on the type of asset, but the most common in rem security rights in Indonesian real estate financing are:

  • a mortgage for land and building;
  • fiduciary security for movable assets (eg, over receivables);
  • a pledge for intangible movable assets (eg, over shares in an Indonesian company) and;
  • personal security in the form of a guarantee (either a personal or corporate guarantee).

There are no restrictions on foreign lenders holding security interests over real estate.

Regarding enforcement, it should be noted that Indonesian law prohibits a secured lender directly taking over the ownership of the security object. Instead, the secured lender must enforce the security right by way of selling the security object (by way of either public auction or private sale) and taking the enforcement proceeds to settle the borrower’s outstanding debt to the secured lender.

There are some fees and taxes payable in relation to the creation of a security interest. For instance, to create a land mortgage, the cost consists mainly of the fees payable to the PPAT and BPN, which include the fees for the preparation, execution and registration of the mortgage deed. The fees are generally calculated on a percentage basis of the amount secured by the mortgage (which is commonly chosen by the lender based on the actual value of the assets or the principal amount of the loan).

A security interest under Indonesian law is accessory in nature, which means that a security interest can only be created if an underlying obligation agreement validly exists. Therefore, a creditor/lender must ensure that a loan agreement has been duly executed and effective before proceeding with the signing of any security document.

Under Indonesian law, the validity of a legal act performed by an Indonesian company may be contested for want of corporate benefit and compliance with the object and purposes of the company's Articles of Association. Therefore, in the case of a third-party guarantee by an Indonesian company, especially when it is an upstream guarantee by a subsidiary company for the benefit of the parent company, it is important for the lender to require the security provider to obtain corporate approvals from all organs of the company (regardless of whether there is any explicit requirement under the constitutional document) confirming that its granting of security in favour of the lender is for the corporate benefit of the security provider.

Prior to enforcing its rights against the borrower in default, the lender should carefully observe and comply with the formal requirements set out under the secured loan agreement, such as the serving of a notice of default, the extension of a grace/remedy period, and the serving of a notice of enforcement. This can minimise the risk where the borrower challenges the validity of the enforcement process.

Priority rights granted to the security holder are given by law once the security is validly created in accordance with the applicable laws and regulations (eg, for a land mortgage, the deed of mortgage has been validly registered with the land registry, as evidenced by a mortgage certificate).

By law, an existing secured debt is given priority over any newly created debt (particularly if the new debt is unsecured) in terms of the lender’s right of enforcement in the event of the borrower’s default. However, it is possible to contractually agree that the existing secured debt will be subordinated to newly created debt.

Indonesian environmental laws adopt the “polluter pays” principle. Therefore, if the lender does not cause the pollution of the real estate, it should not be held liable merely by holding or enforcing security over the real estate.

The Indonesian Financial Services Authority sets a requirement for Indonesian lenders to implement and promote sustainable business, including by way of applying a strict requirement for their borrowers to comply with the environmental laws. Nonetheless, it should not shift the environmental liability of the borrower to the lender if the borrower is the one causing the pollution.

Indonesian Bankruptcy Law acknowledges several types of security interest, including the mortgage (which is mostly relevant for the real estate sector), fiducia and hypothec, which, by law, will remain valid if the borrower is insolvent and will provide preference rights to the secured creditors.

Real property purchasers (which are mostly Indonesian individuals or business entities obtaining property financing from Indonesian banks) are not expected to be affected by the LIBOR index expiry as it is not really common for Indonesian loan financing agreements to refer to LIBOR for the interest rate calculation. The more common interest rate reference is the Jakarta Interbank Offered Rate (JIBOR).

The LIBOR index expiry may be more relevant for real property developers obtaining offshore loan financing, although, in such a case, the standard forms of loan agreement typically used for offshore loan financing (such as LMA and APLMA) should have already provided alternative methods of interest calculation, such as alternative screen rate, reference bank rate, and cost of fund. For more proper administration, another option is for the borrower to negotiate the amendment of the loan agreement with the bank to set a fixed reference screen rate to replace LIBOR.

Under Law No 26 of 2007 (as amended) on Zoning/Spatial Plan and GR 21/2021, the central government sets the general norms, standards and criteria of zoning plans, to be further implemented in detail by the regional governments. In addition, the Minister of Environment and Forestry and the Minister of Marine Affairs have the authority to determine zoning for forestry and coast areas, respectively.

In order to control compliance with the zoning rules, the government will ensure that all companies comply with the zoning rules before granting any business licences and/or building construction approvals (Persetujuan Bangunan Gedung – PBG).

The design and construction of a building are governed under Law No 2 of 2017 on Construction Service and Law No 28 of 2002 on Building, both as amended by the Omnibus Law and their related implementing regulations. Before constructing a new building or renovating an existing one, the building owner must first obtain building construction approval on the building technical plan from the regional government. The plan must comply with the technical architecture and building intensity standards, such as:

  • building base coverage (KDB) – percentage of land and ground floor of the building areas;
  • building floor coverage (KLB) – total floor area that can be constructed;
  • green base coverage (KDH) – total open space area, upon which construction is prohibited; and
  • border line (GSB) – minimum land from the boundaries area upon which construction is prohibited.

The building owner must also comply with the safety standards set by the government regarding fire protection, lightning, elevators, etc.

The central government and each relevant regional government are authorised to set the zoning rules of an area.

The regional government is authorised to issue construction approval on the building technical plan.

The relevant developer must first the relevant licences.

Licences to construct a building vary, depending on the policies of each regional government and the scale of the building. Typically, before commencing construction, the developer needs to obtain the following:

  • the Location Permit;
  • the Statement of Zoning Planning (Ketetapan Rencana Kota – KRK);
  • the environmental permit; and
  • the PBG.

Third parties are not allowed to participate in a development project without prior approval from the project owner. Nevertheless, in practice the building owner is required to first consult with the surrounding neighbours and obtain their consent before commencing the construction project.

Private parties can raise a challenge to the government agencies and, ultimately, any government decision can be challenged at the Administrative Court.

Indonesian laws allow governmental authorities or agencies to enter into a commercial contract with a private party, provided all appointment requirements are met.

If there is any alleged violation of the zoning regulations, the government (including regional government) will conduct an audit and investigation. There are various administrative sanctions for any proven violation, such as written warning, fines, suspension of activity and demolition of the building.

The only option for foreign investment is through an Indonesian limited liability company (PT PMA).

Under the Company Law, a PT has the following features:

  • the capital consists of shares;
  • the General Meeting of Shareholders (GMS) holds the highest authority;
  • the Board of Directors is authorised to manage the PT in its daily business activities;
  • the Board of Commissioners is authorised to supervise the Board of Director’s actions on behalf of the PT; and
  • dividends are distributed to shareholders.

The minimum paid-up capital for a PT PMA is IDR2.5 billion (approximately USD180,000), and the minimum investment is IDR10 billion (approximately USD720,000), excluding land and buildings.

There are no specific governance requirements, but the following general governance requirements apply for a PT:

  • a PT must have at least two shareholders;
  • a PT must have a Board of Directors and a Board of Commissioners; and
  • shareholders must convene an annual GMS, to approve the financial report of the PT, among other purposes.

Additionally, in order to conduct business activities, a PT engaging in real estate must obtain the following licences and permits:

  • a business identification number (nomor Induk beusaha – NIB);
  • a business licence;
  • a taxpayer registration number; and
  • an operational licence such as an environmental permit and PBG.

Typically, a company engages a financial adviser to manage this aspect.

Lease or borrow use (pinjam pakai) arrangements are allowed under Indonesian law, and are contractual matters under Indonesian law, so no limit applies as long as the underlying land title is still valid.

There are no regulatory types of commercial lease; it is a purely contractual matter.

There is no regulatory rule for lease terms; they are purely contractual matters.

The terms of a lease are contractual matters. Typically, the length of the lease period is monthly, annual or even up to more than five years, depending on the type of real estate and the purpose of utilisation. The payment term can be agreed on either a monthly, quarterly, semi-annual or annual basis.

Depending on the contractual agreement between the lessor and the tenant, any increase is typically determined periodically and, most of the time, after the lapse of the initial lease period or subject to review on a yearly basis.

New rent is determined based on mutual agreement of the lessor and the tenant. In some cases, the parties have already agreed in the existing lease agreement on certain formula to determine the new rent following the lapse of the initial period.

If the lessor is a taxable entrepreneur, 10% VAT will be payable on the lease/rent.

Common costs include cash deposit, maintenance fees/service charge, and insurance.

The common practice is for the tenant to pay the maintenance fees and set any repairs as the lessor’s responsibilities, unless the damages are proven to be caused by the tenant.

Each of the leased premises usually has its own meter to record the use of utilities and telecommunications by the relevant tenant, who will be charged the corresponding costs.

In some cases, the insurance premium is included as tenants’ expenses in order to remain effective during the entire lease period. Insurance coverage ranges from specific risk (eg, fire, riot, terrorism, explosion, theft/burglary, airplane crash, flood) to comprehensive all risk.

A landlord can restrict how the tenant uses the real estate contractually. In addition, the Apartment Law (as amended by the Omnibus Law) provides that the utilisation of a house as a commercial premises should be conducted in a manner that does not jeopardise or disturb its residential function (ie, it must not cause environmental pollution, odour, disturbing sound, etc). Separately, the common practice in Indonesia is to restrict tenants from sub-leasing real estate.

The alteration of real estate is agreeable on a contractual basis. In most cases, it requires prior approval from the lessor and an obligation for the tenant to revert the condition of the real estate to the initial condition upon the expiry of the lease period.

Various sectoral regulations may affect the terms under a commercial lease agreement. For instance, Government Regulation No 142 of 2015 obliges industrial companies to build factories in the industrial area no later than four years as of the effective date of the lease period.

In the event of a tenant's bankruptcy, the receiver is authorised to terminate the lease agreement, and the lessor will have the right to claim for compensation and become an unsecured creditor of the bankrupt tenant.

The common practice is to require a cash deposit, which can be used to cover any outstanding payment by the tenant.

Article 1573 of the Indonesian Civil Codes provides that a new lease will begin if the tenant continues to occupy the real estate following the expiry of the lease period. In some cases, if the tenant fails to vacate the real estate in a timely manner, the lease agreement entitles a lessor to:

  • impose a fine;
  • terminate the supply of utilities to the real estate;
  • prohibit the tenant entering the real estate; and/or
  • vacate the real estate at the tenant’s expense.

The assignment of a leasehold interest is a contractual matter. The common practice is to require prior approval from the lessor.       

Breach of contract and force majeure events provide the right for the contracting parties to terminate the lease. Unless it is waived by the parties in the agreement, the termination requires a court stipulation.

There is no regulatory registration requirement for leases.

Eviction requires assistance from the competent court. In practice, a district court can issue a decision in six to 12 months; there will be additional time if the dispute goes to the high court or the Supreme Court.

As a general rule, a contract only binds the contracting parties, so a lease cannot be terminated by a third party.

Depending on the scale and nature of the project, several pricing mechanisms are provided under the Construction Law, as follows:

  • unit price;
  • turn-key/lump sum;
  • hybrid of lump sum and unit price; and
  • cost-plus fee.

This is not an exhaustive list, and the parties may contractually agree on other mechanisms.

Assigning responsibility for the design and construction of a building is a contractual matter under Indonesian law.

Indonesian construction law allows either the appointment of a third-party contractor to perform both functions, or the appointment of different contractors to perform each task respectively.

The construction contract typically governs the mechanisms agreed between the parties to manage the risk in a construction project, such as warranties on defects or indemnification. It is also common to involve a third party to provide a guarantee of a contractor’s performance, such as bank guarantee or insurance.

Additionally, the Construction Law requires the contract to clearly provide the liability period in case of building failure, which is subject to the investigation and verification of the building expert appointed by the government. However, as a general rule, if the lifetime of the building exceeds ten years, the contractors’ liability for the building’s failure is limited to ten years from the final delivery of the building.

Typically, the parties will negotiate provisions in the event of delay. The following provisions are commonly included in contracts:

  • cause of delay – due to contractor’s negligence or force majeure;
  • extension of time – in certain circumstances (eg, if the project owner requests the work to be suspended) the contractor may request additional time without incurring penalty/damages;
  • penalty or compensation – if the delay is caused a by contractor’s gross negligence, the project owner may claim a penalty or other form of compensation; and
  • termination – the parties may also agree that certain degrees of delay by the contractor could result in the termination of the contract.

For large-scale projects, it is common for the project owner to request a bank guarantee, surety bond or sponsor’s guarantee. It is also common for a contractor to request a bond or letter of credit to ensure payment from the project owner.

As long as there is a monetary obligation from the project owner to the contractor and/or designer, the contractor and/or designer may request the project owner’s property, including the land, to be encumbered to secure its payment obligation.

To remove the encumbrance, the outstanding payment must be settled by the project owner. In the case of default, the contractor and/or designer as the holder of the security may enforce the security by way of public auction or private sale, as the case may be, and collect the proceeds from such sale to settle the debt.

Upon completion of construction, the project owner must obtain a building worthiness certificate (SLF), the process for which involves a site visit and verification by the regional government to ensure the building can be used properly and in line with the PBG.

As a general rule, if the seller is a taxable entrepreneur, the sale and purchase of real estate is subject to 10% VAT, and to an additional luxury tax VAT of 20% if the transaction value meets a certain threshold. The VAT is to be withheld by the seller from the purchaser, and subsequently paid to the state’s treasury. In practice, the purchaser and seller may agree to share the VAT burden allocation.

Please consult a qualified tax/financial adviser for further details on VAT.

Parties typically engage a qualified tax and financial adviser to advise on structuring the transaction in a way that can maximise any tax benefit and exemption provided under the prevailing laws and regulations.

As far as is known, the only relevant tax imposed by regional governments on real property transactions are as follows:

  • BPHTB in the maximum amount of 5% of the purchase price, which rate may vary depending on the region where the land is located; and
  • annual land and building tax (Pajak Bumi dan Bangunan – PBB).

Detailed rules on the above need to be reconfirmed separately with a qualified tax/financial adviser.

As a general rule, any income generated by foreign investors from business is subject to Indonesian tax, including income from real estate leases/rentals. The detailed rules on the withholding tax, including if there is any specific tax exemption and tax treaty-based preferential tariff, need to be clarified with a qualified tax/financial adviser.

There are some tax benefits/facilities associated with the ownership of real estate in Indonesia that can be enjoyed by PT PMA as provided under the Indonesian Investment Law No 25 of 2007, including the acceleration of depreciation/amortisation and the relief on PBB dedicated to specified business sectors carried out in specified regions or areas.

However, detailed rules on this need to be confirmed with a qualified tax/financial adviser.

Walalangi & Partners (in association with Nishimura & Asahi)

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Law and Practice


Walalangi & Partners (in association with Nishimura & Asahi) is a corporate and business law firm with a strong commitment and dedication to assisting and working together with clients to achieve their corporate and commercial goals in Indonesia. W&P operates in full association with Nishimura & Asahi (N&A), which is Japan’s largest full-service international law firm and has more than 600 lawyers working in close collaboration in 18 offices around the world, to offer unrivalled one-stop legal services. W&P is made up of 26 fee earners, three partners and two counsels.

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