Indonesian Government Extends VAT Incentive for Property Sector

Policy Overview

The Indonesian government has announced the continuation of the 100% Value Added Tax (VAT) incentive for the purchase of houses and apartments valued up to Rp5 billion throughout 2026. This decision, formalized through Finance Minister Regulation No. 90/2025, is expected to provide a significant boost to the property and cement sectors.

Impact on Key Players

Several publicly listed companies are poised to benefit from this policy extension. PT Metropolitan Land Tbk (MTLA), a prominent player in the property sector, has expressed optimism about the potential positive impact of this incentive. Other companies such as LPKR and SMGR are also likely to see increased demand due to the reduced financial burden on property buyers.

Economic Rationale

The government's decision to extend the VAT incentive is aimed at stimulating property demand and supporting overall economic growth. By reducing the tax burden on property purchases, the government hopes to encourage more transactions in the property market, which in turn could lead to increased activity in related sectors such as construction and cement production.

Market Expectations

Analysts expect that this policy will have a positive effect on the stock prices of companies operating in the property and cement sectors. The extended incentive is likely to improve investor sentiment and potentially lead to increased investment in these sectors.