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Building Taxes and Entrepreneurs

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  • Building Taxes and Entrepreneurs

    I observe that many Indonesian people do not bother registering their land and they don't bother getting planning permission for buildings. The reason may be that planning permission in Indonesia appears to be 1014 times more expensive than the UK.

    By comparison UK planning permission costs about 400 GBP over 2 acres. 2 acres is 8200 square meters (sqm). This is equivalent to 0.0488 GBP per sqm. Also note, the cost does not depend on business/private use.

    My Indonesian wife is considering building a 2 level house (with one section having a basement) on 350 sqm. Indonesian government tax is 1157 GBP (20 juta IDR), or 3.3 GBP per sqm.
    If the building is used for business, the costs are multiplied by 3.

    To fairly compare with the UK, I use a purchasing parity factor of 5.

    Thus, for an Indonesian, planning permission is 338 times higher than the UK. for a house and 1014 times more expensive for a business.

    House: 338 = 5 x 3.3 / 0.0488
    Business: 1014 =338 x 3

    Looks like the only people who can afford to set up a even a small but official business or home in Indonesia are those who are already wealthy.