Rental income tax in Indonesia on warehouses, factories and other land or buildings is a 10% final tax on the gross rent, under Government Regulation (PP) 34/2017. If the tenant is a company, the tenant usually withholds it from the rent and pays it to the state; otherwise the landlord pays it. VAT may apply on top, at an effective 11%. This guide covers what counts as rent, who pays, how VAT works, the deadlines and a worked example.
The short version:
Rate: 10% of the gross rent, and the tax is final, so no expenses can be deducted.
Base: service, maintenance and security charges are included, even when billed under a separate agreement.
Who pays: a tenant that is a withholding agent, such as an Indonesian company, withholds the tax. Otherwise the landlord pays it.
VAT: a VAT-registered landlord adds VAT at an effective 11% under PMK 131/2024.
Deadlines: pay by the 15th of the following month, and report within 20 days after the month ends.
The rule itself is not new. In August 2026, after reports of a 2027 tax drive aimed at rental property, a Directorate General of Taxes (DGT) official confirmed that the 10% final tax has applied since 2 January 2018.
What is the rental income tax rate in Indonesia?
The rental income tax rate in Indonesia for land and buildings is 10% of the gross rental value, and it is final. This tax is known as PPh Article 4(2). “Final” means the tax paid on the rent settles the landlord’s income tax on that income: maintenance costs, depreciation and property tax cannot be deducted from it, and the income is still reported in the annual return but not taxed again.
The 10% rate covers warehouses, factories, offices, shophouses, land and houses alike. PP 34/2017 excludes accommodation services such as hotels and boarding houses, which are taxed differently. Because the rate is flat, the rental tax in Indonesia is predictable: the same lease value always produces the same tax.
What counts as rent for tax purposes?
Rent for tax purposes is every amount the tenant pays, or records as owed, in connection with the land or building. PP 34/2017, Article 4(2), lists maintenance, upkeep, security, service and other facility charges as part of the gross amount, whether they sit in the main lease or in a separate agreement.
This matters for warehouse rent tax in practice. A landlord who splits a Rp100,000 per m² package into Rp85,000 of “rent” and Rp15,000 of “service charge” still owes 10% on the full Rp100,000. Splitting the contract does not reduce the tax.
Renting equipment is different. Under Article 23 of the Income Tax Law, rent for assets other than land and buildings, such as forklifts or racking hired separately, carries a 2% withholding tax instead. If a lease bundles both, list the building and the equipment as separate items so each is taxed correctly.
Who withholds the tax: the tenant or the landlord?
The tenant withholds Indonesia’s 10% rental income tax when it is a designated withholding agent, and the landlord pays it directly in every other case. PP 34/2017, Article 3, names the withholding agents:
government bodies;
domestic corporate taxpayers, including PT companies and foreign-owned PT PMA companies;
event organisers;
permanent establishments and joint operations (KSO);
representative offices of foreign companies;
individual taxpayers designated by the DGT.
Warehouse and factory tenants are usually companies. All 44 warehouse and factory lease requests on the Yardzeal client requirements page, out of 77 active requirements as of 2 October 2026, come from businesses or business projects rather than private individuals. For a landlord, that means rent usually arrives net of 10%, together with a withholding slip (bukti potong) as proof that the tax was paid.
If the tenant is an individual who has not been designated, or is otherwise outside the list, the landlord pays the tax directly.
How does VAT on rent work in Indonesia?
VAT on rent in Indonesia applies when the landlord is a VAT-registered business (PKP). The landlord adds VAT to the rent and issues a tax invoice. Under PMK 131/2024, the rate is 12% on a tax base of 11/12 of the rent, an effective 11% for non-luxury services, and this has applied since 1 January 2025.
Registration becomes mandatory once a business’s annual turnover exceeds Rp4.8 billion, a threshold originally set by PMK 197/2013. A smaller landlord who has not registered does not charge VAT. A VAT-registered tenant can usually credit the VAT it pays against its own VAT due, so for many industrial tenants VAT is a cash-flow item rather than a final cost.
How much tax is due on a warehouse lease?
On a warehouse lease of, for example, Rp160 million a month, the tenant withholds Rp16 million of income tax and pays Rp17.6 million of VAT on top, if the landlord is VAT-registered. Here is the example in full: a 2,000 m² warehouse at Rp80,000 per m² per month including service charge, leased by an Indonesian PT from a VAT-registered landlord.
Gross rent: 2,000 × Rp80,000 = Rp160,000,000 a month.
Income tax withheld (10%): Rp16,000,000, paid by the tenant to the state.
VAT (effective 11%): Rp17,600,000, added to the invoice.
Paid to the landlord: Rp160,000,000 − Rp16,000,000 + Rp17,600,000 = Rp161,600,000.
Landlord’s net rent: Rp144,000,000, because the VAT is passed on to the state through the landlord’s VAT return.
Some landlords want the full Rp160 million in hand. That needs a gross-up clause: the rent is set at about Rp177.8 million so that 10% withholding leaves Rp160 million. Agree this before signing, because the difference is about Rp17.8 million a month, and VAT then rises with the higher rent.
When must lease tax in Indonesia be paid and reported?
Lease tax in Indonesia must be paid by the 15th of the month after the payment or due date, under PMK 81/2024, the regulation behind the Coretax system. The monthly return is due within 20 days after that month ends, under the General Tax Provisions Law (KUP).
Timing: the tax is generally owed when rent is paid or falls due, whichever comes first, according to DDTC. A year’s rent paid in advance is taxed in the month it is paid.
Paperwork: withholding slips and the monthly return are now issued through Coretax.
Late filing: a late monthly return carries a Rp100,000 fine, according to the DGT.
Late payment: interest is charged monthly at a rate set by the Ministry of Finance, 1.01% a month for October 2026, for up to 24 months.
What other taxes come with a warehouse lease?
A warehouse lease also brings stamp duty, land and building tax, and sometimes questions about small-business tax.
Stamp duty: Rp10,000 on the signed lease, under Law 10/2020.
Land and building tax (PBB-P2): a regional tax owed by whoever owns, controls or uses the property, at up to 0.5% of a value based on the assessed value (NJOP), under Law 1/2022. Leases should say who pays it.
Small-business regime: rental income already taxed under PP 34/2017 is outside the 0.5% small-business (UMKM) regime, under PMK 164/2023.
Buying instead of leasing brings a different set of taxes. For that route, start with our guide to industrial land in Indonesia, then see our guides to BPHTB and the full cost of acquiring land.
Which mistakes cause problems with the tax office?
Many rental tax problems in Indonesia come from lease contracts that do not match how the tax works.
Taxing only the “rent” line. Service and facility charges are part of the 10% base under PP 34/2017.
No gross-up clause. The landlord expects the full rent and the tenant withholds 10%, and the dispute starts on the first payment.
Missing withholding slips. Without the bukti potong, it is harder for a landlord to show the tax was paid.
Late payment on advance rent. Tax on a prepaid year is owed in the month of payment and must be paid by the 15th of the next month, not spread across the year.
Assuming a foreign landlord is treated the same. Rent paid to a landlord who is not an Indonesian tax resident may be taxed under different rules and tax treaties, so take advice first.
Rental tax checklist for a new lease
Confirm whether the tenant is a withholding agent.
Confirm whether the landlord is VAT-registered (PKP).
State whether the rent is gross or net of the 10% tax.
List service, maintenance and equipment charges separately.
Agree who pays land and building tax.
Diary the 15th-of-the-month payment date for every rent payment, including advance payments.
Make sure the land title and permits are in order, using our land due diligence guide.
FAQ
Is rental income tax in Indonesia a new tax?
No. The 10% final tax on renting land and buildings has applied since 2 January 2018 under PP 34/2017. In August 2026 a DGT official confirmed that nothing new starts in 2027.
Do I pay rental tax if the tenant is a company?
Usually not directly. An Indonesian company tenant withholds the 10% from the rent, pays it to the state and gives you a withholding slip. You report that income, but you do not pay the tax a second time.
Is warehouse rent tax different from office or shop rent tax?
No. The same 10% final rate applies to warehouses, factories, offices, shophouses, land and houses. Only accommodation such as hotels and boarding houses falls under different rules.
What happens if I split the lease into rent and service charge?
Nothing changes. The 10% applies to the combined amount, because PP 34/2017 counts service, maintenance and security charges as part of the gross rent, even under a separate agreement.
What is the risk if the tax is paid late?
Late payment draws monthly interest at the rate set by the Ministry of Finance (1.01% a month for October 2026), for up to 24 months. A late monthly return adds a Rp100,000 fine.
Should the lease say whether rent is gross or net of tax?
Yes. Without a clear clause, the landlord may expect the full rent while the tenant withholds 10%. Writing “gross” or “net of PPh 4(2)” into the lease avoids that dispute from the first payment.
Getting rental income tax in Indonesia right
Rental income tax in Indonesia is simple on paper: 10% final, plus VAT where the landlord is registered. Many disputes come from contract wording, not the rate. A lease that names the tax treatment clearly protects both sides from the first payment onwards. To see what warehouse and factory space occupiers are looking for and how industrial leases are structured, visit Yardzeal.