Renting-Out a Second Home in Indonesia: A Case of Non-Resident Taxation

Under recently issued regulations, Indonesia can be the “second home” for non-residents, with expanded access and simplified administrative procedures for property acquisition. This article aims to analyse the legal and theoretical justification of applying property-rental tax to properties owned by non-residents and discuss the impact of the new regulations on the property-rental tax regime in Indonesia. It is found that the intersection between government regulations and existing tax policy on renting presents considerable challenges. First, tax collection is inconsistent and uncertain due to the lack of a sound legal base. Second, the tax supervision system is neither integrated with land mapping database of relevant agencies nor automated. Therefore, the tax regulation and supervision mechanisms for non-residents acquiring and renting out property in Indonesia need to be improved.