Investing in real estate">commercial real estate in Bali offers interesting business opportunities, but it's important to be aware of the taxes involved. As an owner of real estate">commercial real estate in Indonesia, including Bali, you will face various types of taxes. These range from value-added tax (VAT) to income tax, and depending on your business structure, they can offer favorable advantages. Below is an overview of the main taxes applicable to real estate">commercial real estate.
For real estate">commercial real estate, you pay VAT on the income you generate. In Indonesia, VAT (also known as PPN – Pajak Pertambahan Nilai) is 10% of the revenue, and this amount must be paid monthly to the tax authorities. This is an important tax for anyone renting out or generating income through real estate.
Entrepreneurs who own real estate">commercial real estate also pay income tax. The standard income tax rate is 12% of the net profit. However, for start-up businesses, a special provision applies: in the first three years, you only pay 0.5% tax on the revenue instead of the regular income tax. This tax advantage is attractive to new investors just starting out in Bali.
Property tax, locally known as Pajak Bumi dan Bangunan (PBB), is calculated based on the value of the real estate. This tax is 0.5% of the value of real estate">commercial real estate and must be paid annually. It is a fixed expense for all property owners in Indonesia.
When you take profit from your business and pay it out as dividends, you pay dividend tax in Indonesia. The standard dividend tax rate is between 10% and 13%, depending on the size of the profit and the reinvestment policy. An attractive tax advantage is that you pay 0% dividend tax if you reinvest the profit within three years in Indonesia. This can be a strong incentive to keep investing your income in local projects and expand your real estate portfolio.
When investing in real estate">commercial real estate in Bali, it's essential to consider the various taxes that apply. By making smart use of tax benefits such as the reduced income tax rate for start-ups and the 0% dividend tax rate for reinvestment, you can minimize your tax burden. This ensures that you retain more profit and can optimize the returns on your investments in Bali's thriving real estate market.
