The Land And Building Tax 101: What and How To Calculate

What is Land and Building Tax? How do we count and pay for it? Read all you need to know about Indonesian Property Tax here!

menghitung dan membayar pajak bumi dan bangunan, counting and paying Indonesian land and property tax
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First-time homeowners or those who are looking for a house or property may still often wonder about the Land and Building Tax, or PBB. For your information, land and building tax is a tax levied on land and/or buildings imposed on property owners. Property is taxed because the owner of the property can benefit financially, physically, and spiritually from owning the property itself. Property owners, or taxpayers who are individuals or institutions, must pay this tax annually after receiving the Tax Return (SPPT). Paying off the tax is very important because it will add value to the house or property in the long run. Let’s find out the complete ins and outs!

Object and Subject of Land & Building Tax 

Based on Law No. 12 of 1994 article 3, it is stated that there are several provisions that regulate tax objects that are not subject to PBB. The tax objects are:

  • To serve the public interest in the fields of worship, social, health, education, and national culture, which does not aim to gain profit.
  • Used for graves, ancient relics, or the like.
  • It is a protected forest, nature reserve forest, tourism forest, national park, grazing land controlled by the village, and state land that has not been encumbered with a right.
  • Used by diplomatic representatives, consulates, according to the principle of reciprocal treatment.
  • Used by agencies or representatives of international organizations determined by the Minister of Finance.

While the tax object is utilized by the state for government administration, the imposition of the tax is further governed by a Government Regulation.

Who is liable to pay the land and building tax? From a person or entity who has a right to the land and/or receives advantages from the land, to a person or entity who has authority over, and/or receives benefits from the building, all of them will be required to pay taxes.

menghitung dan membayar pajak bumi dan bangunan, counting and paying Indonesian land and property tax

The Sales Value of Tax Objects (NJOP)

According to Law No. 12 of 1985, Sales Value of Tax Objects, or NJOP, is the foundation for the imposition of PBB. The average price collected through the sale and acquisition of property is the Sales Value of the Tax Object. The anticipated price of a property calculated based on the area and zone of the house and building is known as the selling value of the tax object, or NJOP.

The amount of this NJOP is adjusted every three years by the Minister of Finance, except for certain regions, it is determined every year according to regional developments. Based on Law Number 28 of 2009 concerning Regional Taxes and Regional Levies, the Sales Value of Tax Objects is used as the basis for calculating Land and Building Tax (PBB) which must be paid annually. 

How to find the basis for determining the NJOP for the PBB? For starters, there are several factors that determine the basic NJOP of Earth and NJOP of Buildings as follows:

Basic Factors for Determining Land NJOP:

  • Place
  • Utilization
  • Allotment
  • Environmental conditions

Basic Factors for Determining Building NJOP:

  • Materials used in building
  • Manipulation
  • Place
  • Environmental conditions

All these factors above can add up and can increase the amount of PBB tax that must be paid. However, if the land and buildings are the results of grants, inheritance, or in the situations in which there is no sale and purchase transaction, there are other ways to determine the NJOP:

  • Comparing it to other similar tax objects in close proximity.
  • Calculate all costs incurred to obtain the tax object minus the depreciation value of the tax object.
  • Determine the amount of NJOP based on the outcomes of the tax object’s product.

Taxable Selling Value

In addition to NJOP, there is also the term Taxable Selling Value (NJKP). NJKP is the amount of selling value that will be included in the calculation of tax payable. NJKP is part of the selling value of the tax object and becomes the basis for calculating PBB. NJKP is also referred to as assessed value.

Based on the Decree of the Minister of Finance Number 201/KMK.04/2000, the government has determined the NJKP percentage for plantation, mining, and forestry tax objects are set at 40%. Meanwhile, other tax objects such as Rural and Urban can be seen first as the selling value of the tax object.

Selling Value of Non-Taxable Tax Objects

The NJOPTKP sets a limitation on the sale value of tax objects on non-taxable land and its structures. The amount of NJOPTKP in each region may vary, but according to the Minister of Finance’s Decree 201/KMK.04/2000, NJOPTKP itself will not exceed Rp12,000,000 if the following conditions are met:

  • Each taxpayer gets a reduction in NJOPTKP 1 time in 1 Fiscal Year.
  • If the taxpayer has more than 1 tax object, only 1 tax object can be deducted or the tax object has the largest value and cannot be combined with other tax objects owned by the taxpayer.

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How to Calculate PBB

The tax rate imposed on the tax object is 0.5%. So, the basic formula to calculate is:

0.5% x NJKP

The formula for finding NJKP is:

20% x NJOP (for NJOP < IDR 1 billion)

40% x NJOP (for NJOP > IDR 1 billion)

Let’s try to do an example of the calculation:

A house with an area of 100 m2 on a land area of 200 m2. It is known that the price of the building is Rp. 1,000,000/m2 and the price of land is Rp. 500,000/m2. So, how much of the PBB must be paid?

First of all, we need to calculate the value of the building and land:

Building value = 100 x IDR 1,000,000 = IDR 100,000,000

Land value = 200 x IDR 500,000 = IDR 100,000,000

Next, we calculate the NJOP by adding up the value of the building and land:

NJOP = Building value + Land value

NJOP = Rp100,000,000 + Rp100,000,000 = Rp200,000,000

From here, we can find the NJKP and the amount of PBB with this easy calculation:

NJKP = 20% x NJOP

NJKP = 20% x Rp200,000,000 = Rp40,000,000

PBB = 0.5% x NJKP

PBB = 0.5% x IDR 40,000,000 = IDR 200,000

So, the amount of tax that must be paid for the land and buildings is Rp. 200,000.

How to Check Land and Building Tax Bills Online?

As mentioned above, Land and Building Tax or PBB bills can usually be collected at the sub-district and can even be collected at the head of the local RT. As we enter the digital era, we can also check the official website provided by the government or via SMS from our smartphone.

Once we get the bills and the amount of our tax, we can also pay off the tax bill by paying it through several methods such as an ATM or eCommerce channel.  Each region in Indonesia has its own official website, so you only need to register ourselves to check our bill. We must enter the Tax Object Number (NOP), then select what year’s PBB bill we want to view.

We can also take advantage of online PBB services when buying a new house to determine whether the previous building owner has paid the tax or not so that we can be free from disputes with the previous building owner.