Jakarta. Finance Minister Sri Mulyani Indrawati said the government plans to cut taxes on luxury properties and revise other tax rules in a bid to support the real estate industry and attract investment in Southeast Asia's biggest economy.
The 20 percent luxury tax threshold on houses and apartments would be raised to at least Rp 30 billion ($2.1 million) from Rp 20 billion currently, she said in comments published on the cabinet secretary's website late on Wednesday.
Sales of luxury property would also be subject to a tax rate of 1 percent of the selling price, against 5 percent now.
"We hope the business side of the construction sector will be boosted," Sri Mulyani said. She did not give a timetable and said the regulations were currently being formulated.
Policy makers have been keen to kickstart the country's sluggish property sector in a bid to help lift an economic growth rate that has been stubbornly stuck at around 5 percent in recent years.
S&P Global Ratings warned on Wednesday that the finances of local real estate developers and state firms might deteriorate in 2019 due to risks rooted in general elections and a further depreciation for the rupiah.
Sri Mulyani said the government was also considering other tax incentives to boost exports, such as removing value-added tax on some service exports, including accounting and legal, and cutting tax rates on time deposits for exporters.
The government also plans to encourage investment in resources by revising corporate taxes for coal miners, as well as re-examining mineral export duties and rules forcing investors to set up smelters, she said, without elaborating.
Coordinating Economic Affairs Minister Darmin Nasution said last week that Indonesia would further ease its so-called "negative investment list" and open previously partly closed business sectors to foreign ownership.
Foreign direct investment in Indonesia fell for the second straight quarter in July-September from a year earlier.
The country attracted Rp 89.1 trillion in foreign direct investment in the third quarter, or around $6.6 billion based on a rupiah exchange rate of 13,400 to the dollar, used by the Investment Coordinating Board (BKPM).