INDONESIA Law and Practice Contributed by: Yogi Sudrajat Marsono, Heru Pamungkas, Agnes Maria Wardhana and Andin Aditya Rahman, Assegaf Hamzah & Partners
mental Law”), generally applies the “polluter pays” principle. Nonetheless, law enforcement authorities can investigate instances of pollution or contamination, particularly those arising from the handling of hazardous and toxic wastes, which may incur criminal sanctions. Parties may regulate the extent of obligation of the seller and/or buyer concerning soil pollution, environmental contamination and usage restric - tions (such as groundwater extraction or chang - es in property usage) in transaction documents, commonly in the sale and purchase agreement. This include indemnification for any violations related to pollution or environmental contamina - tion, usage restrictions for subsequent property buyers and indemnification for environmental claims. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law Spatial designations are governed by regional regulations at the city/region and provincial level. To ascertain a land’s spatial designation, a party must apply for a Spatial Planning Conformity ( Kesesuaian Kegiatan Pemanfaatan Ruang, or KKPR) from the MOA through the OSS. The KKPR is valid for three years and can be extended for two years. For businesses that have acquired land, the KKPR’s validity aligns with the tenure of the land. For national strategic projects, a recommen - dation for a KKPR may be granted, even if the project location does not align with the existing spatial designation. 2.9 Condemnation, Expropriation or Compulsory Purchase Indonesian law does not recognise governmen - tal condemnation, expropriation or compulsory
purchase of property. However, there are cir - cumstances where property ownership can be relinquished, including: • land acquisition by the government for public purposes, with compensation paid to title holders; • property confiscation based on a criminal court decision (eg, in corruption cases); • if the land ownership document is annulled by an administrative court decision; • voluntary relinquishment by its owner; • if the land title term expires and title is not renewed (the previous title holder has a prior - ity right to apply for renewal within two years after expiration, subject to certain require - ments, including continued utilisation of the land); and • if the land is abandoned or destroyed. 2.10 Taxes Applicable to a Transaction Buyers are subject to 5% duty on the purchase price on acquiring land and buildings ( Bea Per- olehan Hak atas Tanah dan Bangunan, or BPH - TB), whereas sellers are subject to 2.5% income tax, to be paid prior to the closing of the transac - tion. For property transactions with developers, 11% value-added tax (VAT) applies, which must be paid after signing the AJB. Until June 2024, an exemption applies for the purchase of new houses or apartment units priced under IDR5 billion (approximately USD320,000) under the post-pandemic incentives implemented by the Ministry of Finance. Transfers of land plots in industrial estates or of apartment units in practice are usually subject to administrative transfer fees imposed by the estate manager.
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