ASEAN Valuers Association 17th
Pre-Congress Meeting (Pre AVA)
Prepared By :
Arridel Mindra
Indonesian Society Of Appraisers
(ISA)
The Management of Land and Building Tax in Indonesia:
A Developing Process Toward a Modern Valuation A Developing Process Toward a Modern Valuation A Developing Process Toward a Modern Valuation A Developing Process Toward a Modern Valuation
SystemSystemSystemSystem
Land and Building Tax (LBT) in Indonesia is administered by
the Directorate General of Taxes (DGT), Ministry of Finance
The valuation and administration process are the core the
activities
Intro duction
Property Law Property Law (Law No. 5/1960)
Unification and Simplication of land laws
Type of land rights.
• Freehold
• Right for commercial exploitation
• Right for constructing a building
• Right for land utilization
Problems in Indonesia:
• Majority land parcels unregistered
• Enforcement of planning permission is weak
Weaknesses of Property Market in Indonesia
Property market is insufficiently developed.
No central data base for real property transactions.
Land as tax object in terms of utility does not have a
format legal status.
Housing and Settlement Law No. 4/1992
Condominium Law No. 16/1985
Property Law, Property Market, and LBT
Historical AspectsBefore Dutch colonialism era
� Land tenure (adat law) under kingdom or village authority.
� Tax in the form of services and tributes to the King.
� Tax base calculated arbitrarily , therefore inaccurate and unfair.
Colonial era under the Dutch Occupation)
� Inaccurate and unfair e.g. assessment by village not by property
� Tax base: 20 percent of the rental value.
Rafles era
� All lands belong to the King/Queen of England
� Individuals rent every land parcel
� The rate of the rent varied from 20% to 50% of its rental value or of its production for
agricultural lands.
The independence era up to the 1980s
� Based on annual market value or rental value for urban area
� Net yield of agricultural production for rural area.
LBT is developed through a series of changes.
The Developmentof Property Tax in Indonesia
Property value (market value of Land plus Market Value of Building)
A flat rate of 0.5%
Taxable Value : 20% or 40% of market value
�Urban and Rural :
� Value at less than IDR 1 billion : 20%
� Value at IDR 1 billion or more : 40%
�Plantation:
� Land area of 25 ha or more: 40%
� Land area of less than 25 ha : 20%
�Forestry: 40%
�Mining: 40%
Untaxed property value: IDR 8.000.000
Tax bill = (Market Value - Untaxed property value) x Taxable Value x Tax
Rate
Current Tax Base
Administrator: Central Government
Responsibilities :
Data collection and Valuation
Assessment and tax bill issuance
Revenue Collection and Law Enforcement
Objection and appeal
Delivery of other services
Revenue Sharing
Shared between local and central government.
� 90% for local government
� 10% for central government
Administration of LBT
Time Series Data of Land and building Tax RevenueTime Series Data of Land and building Tax RevenueTime Series Data of Land and building Tax RevenueTime Series Data of Land and building Tax Revenue
Budget % of
Year Rural Urban Plantation Forestry Mining Total Revenue Changes
2000 267.397.701 1.084.249.881 198.752.933 132.391.047 1.879.299.055 3.562.090.617
2001 322.216.495 1.711.997.316 244.773.139 169.800.651 2.838.248.039 5.287.035.640 48,43%
2002 399.066.235 2.008.265.220 261.099.574 173.111.313 3.535.207.568 6.376.769.910 20,61%
2003 443.840.946 2.316.977.619 309.827.241 157.278.681 5.561.090.534 8.789.015.021 37,83%
2004 478.018.422 2.624.605.287 337.491.915 152.030.505 8.148.900.708 11.741.046.837 33,59%
Sector
----IDR 8 MillionUntaxed Value4
6
5
3
2
1
No
Administrator
Taxable Value
Tax Rate
Tax Base
Legal Basis
Comparative
Factors
Central Government
20% up to 100%
Fixed
0.5%
Capital Value
Law No 12/1985
Indonesia
Local Government
-
Varies
Max : 35%
Annual Value
Local Government
Act 1976
Malaysia
Local Government
Varies
Varies(Non Domestic : Poundage 0.40)
Rental Value
Capital Value
LGTA 1988
UK
Local Government
-
Varies
Based on Financial Year
1. Capital Value
2. Land Ownership and
size
Urban, Rural and District Council
Act
Zimbabwe
State
-
1. Budget
2. Fixed
1.Capital Value
2. Varied (land Value)
Local Government
Act
Australia
Comparative Property Tax SystemsComparative Property Tax SystemsComparative Property Tax SystemsComparative Property Tax Systems
Computerized data management system developed since early 1990’s referred to as SISMIOP (Land and Building Tax Object Management Information System)SISMIOP’s Characteristics:
Simplicity in Design and OperationPermanentSimultaneous and automatic information update.
Supported by:Geographic Information System (GIS) ���� for mapsComputer Assisted Valuation ���� for building valuation.
Data Management System For LBT
BASIC DATA MANAGEMENT MODULE
DATA COLLECTION
COMPONENT
MAP & FORMS MGMT
COMPONENT
DATA ENTRY VALIDATION
COMPONENT
DATA FILE MAINTENANCE
COMPONENT TAX BILL PRODUCTION MODULE
TAX BILL PRINTING
COMPONENT
RECEIPT PRINTING
COMPONENT
TAX ROLL PRINTING
COMPONENT
BILLING STATISTIC
COMPONENTVALUATION & ASSESSMENT MODULE
VALUATION
COMPONENT
ASSESSMENT
COMPONENT
VALUE & ASSESSMENT STATISTICS
GENERATION COMPONENT
PERFORMANCE MONITORING MODULE
TAX PAYMENT
MONITORING
COMPONENT
PAYMENT POINT
MONITORING
COMPONENT
ENFORCEMENT MONITORING COMPONENTINFORMATION RETRIEVAL MODULE
SYSTEM ACCESS
MANAGEMENT COMPONENT
DATA MODIFICATION &
MONITORING
INFORMATION RETRIEVAL COMPONENT
ONE STOP SERVICE MODULE
PRESENTATIONS
MONITORING COMPONENT
ONE STOP SERVICE
COMPONENT
INFORMATION RETRIEVAL COMPONENT
PROPERTY
FILE NUMBER
(NOP)
TAX PAYERS
PRESENTATIONS
FILE
SISMIOP DESIGN:
Sample of Block Map Supported by GIS
Valuation Sy stem
Mass and individual appraisal.
Mass Appraisal for standard properties e.g.
residential properties
Individual Appraisal for special property e.g.
factories, offices, etc.
Method: Cost approach.
Land valued as if vacant
Building valued based on its Depreciated
Replacement Cost
Parcels of land are grouped based on:
Similarities of land use
Availability of public facilities
Accessibility
Potential Development Values
Every group has an Average Indicated Value calculated as follows:
Firstly, transaction data are collected for a group
Secondly, every data is analysed to estimate its market value.
Adjustments are given for date of transaction and the type of
data (i.e. selling price, mortgage, or asking price).
Thirdly, estimates of market values are averaged to produce an
Average Indicated Value
Land value for every parcel within a group is the average Indicated
Value of that group.
LBT Valuation System
Land Valuation
Sample of Land Value Zone Map Supported by GIS
Using a computerised system referred to as CAV.Based on the cost approach.The cost of constructing a new and similar building (CRN) is estimated based on a model representing typical buildings.The depreciation depends on a building’s effective age, CRN/m2 and its condition.
Building Valuation
Computer Assisted Valuation (CAV)
For mass appraisal, buildings need to be categorised and standardised.Buildings are grouped into standard and non-standard buildings.The CAV is used to value the standard buildings.
� a maximum of 1000 m2 floor area or � four stories or less or � a maximum of 10,000 m2 for land area.
NUMBER OF FLOOR
1
207,000
269,000
278,000
323,000
372,000
399,000
424,000
FLOOR
AREA
1-69
70-99
100-149
150-299
225-229
300-449
450-549
>=550 436,000
2 - 4
207,000
278,000
337,000
404,000
470,000
536,000
601,000
641,000
BCT OF MAIN COMPONENT (Rp/m2) 1. ROOF
� Concrete slab Rp. 93,000/m2,
� Concrete roof tile Rp. 71,000/ m2,
� Clay roof tile Rp. 45,000/ m2,
� Corrugated eternite roof Rp. 22,000/ m2,
� Corrugated zinc roof Rp. 15,000/ m2,
2. WALL FINISHES
� Glass Rp. 122,000/ m2,
� Aluminium Rp. 60,000/ m2,
� Concrete Rp. 76,000/ m2,
� Brick Rp. 57,000/ m2,
� Timber Rp. 21,000/ m2,
� Zinc Rp. 13,000/ m2.
3. FLOOR FINISHES
� Marble Rp. 134,000/ m2,
� Ceramics Rp. 59,000/ m2,
� Terrazzo Rp. 52,000/ m2,
� Cement floor tile Rp. 28,000/ m2,
4. CEILING
� Acoustic Rp. 91,000/ m2,
� Thin plywood Rp. 38,000/ m2.
BCT OF MATERIAL COMPONENT (Rp/m2)
BCT FOR STANDARD BUILDING
Have special characters, e.g. high-rise building.Valued using a tailor-made software named BCT 2000.Building values can be updated by adjusting the cos ts of building components.Basic features:
The logical procedure and process can traced and updated;Adaptable to internal and external changes;Building cost is calculated through actual construction stages based on actual building materials.Buildings are classified into 16 types supplemented with 19 types of facilities and equipments.Building structure is divided into three components : main structure, building material, and building facilities.
Non-Standard Building
572,877
594,586
617,118
640,503
664,775
689,966
716,112
743,248
771,413
800,646
657,382
663,396
522,540
501,166
544,825
461,006
480,667
568,060
592,286
617,546
643,883
671,343
FLOOR.
NUMBERBUILDING USAGE CODE
2/9 4 5 6 7 12 13 16
1 506,944 578,332 655,286 577,269 611,189 643,913
2 522,859 622,644 592,222 616,781 660,286
3 539,275 670,351 607,562 622,424 677,075
4 556,206 721,713 623,300 628,118 694,291
5 573,668 777,011 639,445 633,865 711,945
6 591,679 836,546 656,008 639,664 730,048
7 610,255 900,642 673,001 645,516 748,611
8 629,414 969,650 690,434 651,422 767,646
9 649,175 1,043,945 708,318 787,165
10 669,556 1,123,932 726,666 807,181
Etc.
BCT 2000’s MAIN COMPONENTS (RP/m2)
One Stop Service (OSS), an all in one services under one roof.
Tax Payer Services is established to cut bureaucratic procedures, simplify payment and Integrated with SISMIOP. Main features:
Telephone Information System for information retrieval through a telephone line.
Online Payment System that provides a method of payment linked to the banking system.
Tax Payer Services
The modernisation of administration and management demonstrates a long and restless works.Future implementation of “the three valuation approaches” and increase professionalism within the valuation process.Improving property market in Indonesia through vari ous consistent policies, programmes, and actions involv ing government, private sectors and individuals.Improving the organisation’s performance by adoptin g a modern organisation system commencing in 2002.
Conclusion andFuture Agendas