Understanding Land and Building Tax in Indonesia and Bali
Managing property in Indonesia requires a clear understanding of local regulations, especially when it comes to taxes. One of the most important taxes you will encounter as a property owner is the Land and Building Tax, commonly referred to as Pajak Bumi dan Bangunan (PBB). Whether you are an Indonesian citizen or a foreign investor, understanding how PBB works is essential to ensure compliance, protect your investment, and avoid unnecessary penalties.
At The Bali Lawyer, we help property owners, investors, and developers in Bali and throughout Indonesia to navigate the complexities of property taxation. This guide explains what the Land and Building Tax is, who is required to pay it, how it is calculated, when it is due, and what happens if you fail to pay it on time.
What Is Land and Building Tax (PBB)?
The Land and Building Tax is an annual tax imposed on all land and buildings within Indonesian territory. This tax is governed by Law Number 12 of 1985, as amended by Law Number 12 of 1994, and further regulated by local government regulations.
PBB applies to land and buildings used for any purpose, including:
Residential homes
Villas
Commercial buildings
Industrial properties
Agricultural land
Vacant land
In Bali, where the property market is active and growing, staying compliant with PBB obligations is especially important.
Who Is Required to Pay PBB?
The obligation to pay the Land and Building Tax falls on the individual or legal entity that holds the rights over the land and buildings. This includes:
Freehold owners (Hak Milik)
Leasehold holders (Hak Guna Bangunan or Hak Pakai)
Companies owning land for business activities
Foreigners who lease land with building rights
If you are a foreign investor leasing land under Hak Pakai, you are generally responsible for paying the tax during the lease term. The notary preparing your purchase or lease agreement should clearly outline who holds this responsibility.
How Is PBB Calculated?
The amount of PBB you must pay is determined based on the Tax Object Sale Value (NJOP – Nilai Jual Objek Pajak). The NJOP is the estimated fair market value assigned by the local tax office. It includes the value of both the land and any buildings on it.
The calculation process is as follows:
Determine the NJOP
The local tax authority determines NJOP each year based on location, land use, and market trends. For example, a beachfront villa in Canggu will have a higher NJOP compared to inland agricultural land.Calculate the Taxable Sale Value (NJKP)
The NJKP is a percentage of the NJOP, usually set at 40%.Formula:
NJKP = 40% × NJOPApply the Tax Rate
The tax rate is typically 0.5% of the NJKP.Example Calculation:
If the NJOP of your property is IDR 2,000,000,000:
NJKP = 40% × 2,000,000,000 = IDR 800,000,000
Annual PBB = 0.5% × 800,000,000 = IDR 4,000,000
Please note that local governments may set minimum or maximum tax amounts.
How to Obtain Your PBB Notification
Every year, the tax office issues a tax assessment letter called SPPT PBB (Surat Pemberitahuan Pajak Terutang Pajak Bumi dan Bangunan). This document provides:
NJOP value
Calculation breakdown
Payment deadline
Payment instructions
Typically, the SPPT is delivered to the address of the property or to the registered tax representative. If you don’t receive your SPPT, you are still legally required to pay the tax. You can request a copy directly at your local tax office.
Payment Deadlines
PBB must be paid annually by the deadline specified in your SPPT, which is usually by the end of September. If you are late, penalties will apply, calculated monthly.
To avoid late payment, many property owners choose to work with a lawyer or tax consultant who monitors the due dates on their behalf.
Penalties for Late Payment
Late payment or failure to pay PBB can result in administrative sanctions, including:
A fine of 2% per month, up to a maximum of 24% of the total tax due
Collection reminders and enforcement measures
Restrictions on property transactions
Legal enforcement through the tax office
In severe cases, property registration certificates may be frozen until outstanding taxes are settled.
How to Pay Your PBB
PBB payments can be made through:
Indonesian banks (Bank Mandiri, BRI, BNI)
Designated payment points (loket)
ATMs and online banking
Mobile applications provided by regional tax offices
If you are outside Indonesia, you can appoint a local representative to make the payment on your behalf.
Updating Your PBB Data
If your property’s condition has changed – for example, you’ve built a new villa or subdivided the land – you must report this to the local tax office so that the NJOP can be updated. Failure to update data may result in penalties or backdated tax obligations.
Changes to be reported include:
New construction
Renovations
Demolition
Change of land use
Transfer of ownership
The process involves submitting an update form with supporting documents, such as land certificates, building permits (IMB or PBG), and photos.
Frequently Asked Questions
Is PBB the same across all of Indonesia?
No. While the calculation formula is set by national regulations, each regency and city has the authority to determine NJOP values and enforce collections. For example, Badung Regency may have different NJOP benchmarks compared to Gianyar or Denpasar.
Can foreigners pay PBB?
Yes. Even if you are a foreigner leasing property under Hak Pakai, you are still responsible for paying PBB during your lease term.
What if I never received my SPPT?
You are still liable to pay. You can visit your local tax office to request a copy or appoint your lawyer to collect it for you.
What happens if I sell my property?
Before the transaction is finalized, you must ensure that all PBB payments are up to date. Unpaid taxes can delay or complicate the sale process.
Why Work With The Bali Lawyer?
Navigating Indonesian taxation can be complex, especially if you are not familiar with local regulations. At The Bali Lawyer, we:
Assist in verifying your NJOP and tax obligations
Handle SPPT retrieval and document preparation
Provide reminders for payment deadlines
Manage communication with the tax authorities
Help you update tax records after construction or ownership transfers
Whether you are a private owner, a foreign investor, or a corporate entity, our professional legal team ensures your property is fully compliant with Indonesia’s Land and Building Tax regulations.
Get Expert Guidance Today
If you have questions about your tax obligations, need assistance in updating property records, or want help making payments to the tax office, our team is ready to guide you step by step.