Transferring land and buildings: work out the tax before you sign

In asset sales, debt settlements by handing over assets, or asset swaps, the tax is often worked out only after the price is agreed. The deal then costs more than planned or leads to disputes later.

Taxes that usually arise

• Final income tax on the transfer for the transferor, generally 2.5% of the gross value under Government Regulation No. 34 of 2016.
• BPHTB for the transferee, at a rate of up to 5% under Law No. 1 of 2022 and the local regulation.
• VAT if the transferor is a VAT-registered business and the transfer is subject to VAT.

Why the structure matters

An ordinary sale, a transfer of assets to settle debt and an asset swap are taxed differently. Choosing a lawful structure that matches the substance of the deal from the start helps avoid corrections and penalties.

Practical steps

• Confirm the title status and fair market value before negotiating price
• Model the tax cost of each alternative structure
• State clearly in the agreement who bears which tax
• Keep supporting documents ready for an audit