DGT Circular Letter No. SE-20/PJ/2015 dated March 18, 2015

GRANTING STATEMENT OF INCOME TAX DISPENSATION ON INCOME FROM TRANSFER OF LAND AND BUILDING RIGHTS AS RESULT OF INHERITANCE

Transfer of land and/or building right as result of inheritance are exempted from income tax from such income. A statement of income tax dispensation will be given on income from transfer of land and/or building right.

Things should be considered before granting A statement of income tax dispensation on income from transfer of land and/or building right as result of inheritance:

1.    Requesting statement of income tax dispensation on income from transfer of land and/or building right as result of inheritance:

a.    Basically income tax from transfer of land and/or building right will be charged to a person or corporate who transfer it, so when the income tax is exempted it is given to the person or corporate who transfer it.

b.    Such exception will be given by issuing a statement of income tax dispensation (SKB PPh) on income from transfer of land and/or building right.

c.    Request on such statement of income tax dispensation will be addressed to tax office where such person or corporate is registered.

d.    Transfer of land and/or building right as result of inheritance is a transfer of land and/or building right from a testator to a heir. Since the testator already deceased, then request of statement of income tax dispensation on income from transfer of land and/or building right will be applied by the heir to tax office where testator is registered.

e.    Term and condition related to the request will refer to DGT Regulation No. PER-30/PJ/2009.

2.    Transfer of land and/or building right as result of inheritance relating to deed of mutual right distribution (APHB).

a.    Distribution of mutual right on inheritance based on APHB to be individual right of each heir including transfer of land and/or building right to all heirs which corresponding to each share based on Indonesia inheritance law and regulation.

b.    On transfer of such right will be considered as transfer of land and/or building right as result of inheritance which is exempted from income tax from such income. A statement of income tax dispensation will be given on income from transfer of land and/or building right.

c.    When at the time of distribution part of mutual right on land and/or building right is transferred from one heir to another heir, should:

                 i.    Receiving party does not have any bloodlines within one degree with the transferring party, such transfer will be payable to income tax on income from transfer of land and/or building right amounting to 5% from gross transfer amount.

                ii.    Receiving party has bloodlines within one degree with transferring party and meet criteria as mentioned in article 5 letter c Government Regulation No. 48 year 1994 concerning income tax payment on income from transfer of land and/or building right as amended by Government Regulation No 71 year 2008, such transfer may be considered as grant which is exempted from income tax from such income.

3.    SKB PPh on income from transfer of land and/or building right can only be given when land and/or building as object of inheritance already been reported in annual income tax return of the testator, unless testator has income under non taxable income.