Understanding the Land and Building Tax (PBB) in Indonesia and Bali: A Complete Guide
If you own property in Bali or anywhere else in Indonesia, you must understand your legal obligations regarding the Land and Building Tax, known as Pajak Bumi dan Bangunan (PBB). This tax affects property owners of all types—residential, commercial, and industrial. Whether you are an Indonesian citizen, a foreigner investing in property through leasehold or company structures, or a developer, understanding how the PBB system works is essential to stay compliant with Indonesian regulations and avoid unnecessary penalties.
At The Bali Lawyer, we help clients across Bali and Indonesia understand, calculate, and manage their PBB obligations. Below, we explain what you need to know about this tax, how it is calculated, when it must be paid, and why professional assistance makes a difference.
What Is the Land and Building Tax (PBB)?
The PBB is an annual tax imposed on the ownership or utilization of land and buildings. The legal basis for this tax is Indonesia’s Law Number 12 of 1985 concerning Land and Building Tax, which has been amended by Law Number 12 of 1994. This tax applies to all regions of Indonesia, including Bali, and is collected by local tax authorities.
This tax is different from transaction taxes such as the Acquisition Duty of Rights on Land and Buildings (Bea Perolehan Hak atas Tanah dan Bangunan/BPHTB), which you pay when acquiring property. Instead, PBB is a recurring obligation for property owners and users, and it must be settled annually.
Who Is Liable to Pay PBB?
The party responsible for paying PBB is the person or legal entity that:
owns the land,
controls the land, or
benefits from the land and buildings.
For foreign investors who hold property under leasehold agreements or through a local company (PT PMA), the tax liability depends on how the legal structure is set up. If you use a nominee arrangement or an Indonesian company holds the Hak Guna Bangunan (Right to Build) or Hak Pakai (Right of Use), you are still responsible for ensuring the tax is paid correctly.
Which Properties Are Subject to PBB?
Generally, PBB applies to:
Residential houses, villas, and apartments
Commercial buildings such as shops, offices, and warehouses
Industrial facilities
Agricultural land
Vacant land designated for development
Certain public and social facilities, like places of worship, hospitals, schools, and government buildings, are exempt. However, exemptions must be formally applied for and documented.
How Is the PBB Calculated?
The calculation of PBB is based on the Tax Object Sales Value (Nilai Jual Objek Pajak/NJOP), which the local tax authority assesses. Here is the general formula:
Tax Due = Tax Rate x Taxable Sales Value (NJKP)
Steps to determine the amount:
Determine the NJOP – The regional tax office establishes a value for your land and buildings, considering the location, use, and market price.
Subtract the NJOP Non-Taxable Portion (NJOPTKP) – A threshold value is deducted to establish the taxable amount.
Calculate the NJKP – This is the portion of the NJOP that is subject to tax, usually a percentage of the net value.
Apply the Tax Rate – The rate is typically 0.1% for most properties but can differ for certain uses.
Example:
If the NJOP for your villa is IDR 3,000,000,000 and the NJOPTKP is IDR 12,000,000, your taxable value becomes IDR 2,988,000,000. The tax due is then 0.1% of that figure (approximately IDR 2,988,000).
Local authorities can adjust the NJOP every three years (or sooner in rapidly developing areas). This is why your PBB bill can increase even if you have not made improvements to your property.
How Is PBB Paid?
Every year, the tax office issues a Tax Due Notification Letter (SPPT-PBB). This document lists the amount owed and must be paid before the due date.
Steps to pay:
Collect your SPPT-PBB from the local Kelurahan (village office) or tax office.
Review the details for accuracy (property data, owner information, amount due).
Pay at designated banks or online payment platforms approved by the Indonesian government.
Keep proof of payment for your records.
Late payment can incur administrative sanctions and interest penalties, so it is critical to pay on time.
What Happens If You Do Not Pay?
If you fail to pay your PBB, authorities can:
Impose penalties and interest charges
Issue collection letters and warnings
Place a lien on the property
Restrict certain legal transactions involving the property
In severe cases, tax authorities may auction the property to recover unpaid tax.
Why Is PBB Compliance Important?
Paying PBB on time and in the correct amount ensures:
Your property remains free of encumbrances.
You avoid fines, penalties, and legal disputes.
You can legally sell, lease, or transfer your property in the future.
Your compliance is recognized when applying for property-related licenses or permits.
Why Work With The Bali Lawyer?
Navigating Indonesia’s property tax system is complex, especially if you are a foreigner unfamiliar with local regulations and procedures. The Bali Lawyer provides comprehensive support to ensure you remain compliant and avoid unpleasant surprises.
Our services include:
Verifying NJOP values and assessing fairness
Reviewing and confirming SPPT-PBB accuracy
Managing payment reminders and documentation
Liaising with the tax office on your behalf
Assisting with tax objections or corrections if there are discrepancies
Advising on tax obligations for new property acquisitions or developments
Additional Tips for Property Owners
Keep your property documents updated – Ensure your title, usage rights, and building permits are properly recorded.
Notify authorities about ownership changes – When you buy or sell property, update your tax records immediately.
Budget for annual PBB payments – Include the tax as part of your ongoing ownership costs.
Stay informed about regulatory changes – The government periodically updates tax regulations, which may affect your liabilities.
Get Professional Help Today
Understanding and managing the Land and Building Tax is essential for anyone owning property in Bali or other regions of Indonesia. With our experience and local knowledge, The Bali Lawyer is ready to help you comply confidently and efficiently.