If you’re thinking about buying property in Lombok, understanding the local tax system is one of the first things you should get your head around. Unlike many Western countries with high annual property taxes, Indonesia’s system is relatively light. This is one of the reasons Lombok is attracting so much investor attention right now.
This guide covers what you actually need to pay as a foreign buyer. It includes annual land tax, purchase taxes, seller taxes, and rental income tax, all updated for 2026.
1. Does Lombok Have Property Tax?
Yes, but it’s low compared to other countries
Indonesia has an annual Land and Building Tax called PBB (Pajak Bumi dan Bangunan). The rate is low by international standards, and the taxable base is calculated on the government’s assessed value, not the market price. This typically keeps the bill well below what investors from the US, Australia, or Europe would expect to pay at home.
2. What Taxes Do You Pay When Buying Property in Lombok?
1. Land and Building Tax (PBB, Pajak Bumi dan Bangunan)
What it is: Annual tax on land and buildings, paid by the property owner (including foreigners under leasehold).
Rate: 0.5%. Applied to the taxable assessed value (NJKP), not the full market price.
How the calculation actually works:
This is where a lot of guides get it wrong. The 0.5% does not apply to the full property value. Here’s the correct method:
- The government assigns an assessed value to your property called NJOP (Nilai Jual Objek Pajak). This is usually lower than the market price.
- A taxable portion (NJKP) is then calculated: 40% of the NJOP if the property is valued at IDR 1 billion or above, or 20% if below.
- The 0.5% PBB rate is applied to the NJKP, not the full NJOP.
Example: If your villa has an assessed NJOP value of $200,000 (above IDR 1 billion equivalent):
- NJKP = 40% × $200,000 = $80,000
- PBB = 0.5% × $80,000 = $400 per year
In practice, the annual tax on most South Lombok properties comes out to a few hundred dollars, far below holding costs in most Western markets.
Tip: The NJOP is set per district and updated periodically. In fast-developing areas like South Lombok, it can increase over time as infrastructure improves and land values rise. Always check the current NJOP on the property’s tax slip (SPPT) before buying.
2. Property Transfer Tax (BPHTB, Bea Perolehan Hak atas Tanah dan Bangunan)
- What it is: A one-time tax paid by the buyer at the time of purchase.
- Rate: 5% of the taxable transaction value, minus a non-taxable threshold (NPOPTKP) set by the local government.
- Who pays: The buyer.
- Example: If you buy a property for $250,000, your BPHTB would be approximately $12,500.
The exact figure depends on the NPOPTKP deduction in your area. This will be calculated by your notary at the time of the transaction.
3. Income Tax on Property Sales (PPh, Pajak Penghasilan Final)
- What it is: A tax on the sale of property, paid at the time of transfer.
- Rate: 2.5% of the gross sale price (or the NJOP, whichever is higher).
- Who pays: The seller.
- Example: If you sell your villa for $300,000, the seller pays $7,500 as PPh.
This must be paid before the notary finalises the ownership transfer at the land office.
3. Do You Pay Tax on Rental Income in Lombok?
Yes. If you rent out your property in Lombok, whether through Airbnb, a local property manager, or direct bookings, you’re subject to rental income tax. The rate depends on how you’ve structured your investment:
Rental Income Tax
For Indonesian tax residents: 10% flat withholding tax on gross rental income.
For non-resident foreigners (without Indonesian tax number): 20% withholding tax applies. This can sometimes be reduced under a Double Tax Treaty if your home country has one with Indonesia, check with a local tax advisor.
For PT PMA (foreign-owned company): Rental profits are subject to Indonesia’s standard corporate tax rate of 22%, with dividends potentially taxed again when distributed. The right structure depends on your volume and long-term goals.
Example: If you earn $30,000/year from villa rentals and you’re an Indonesian tax resident under leasehold, your tax would be $3,000 (10%).
Note: A foreigner investing personally (not via a company) is generally not permitted to rent out a property on platforms like Airbnb. A PT PMA structure is the legal route for foreign-owned rental operations. This is worth getting right from the start. Speak to a legal advisor before you set up.
4. Tax Benefits of Investing in Lombok
- Low annual property tax. The real PBB bill on most Lombok properties is only a few hundred dollars per year, not thousands.
- No inheritance tax. Indonesia does not levy inheritance tax, which is a meaningful advantage for estate planning.
- Lower taxes than Bali. Assessed NJOP values in South Lombok remain lower than Bali’s more mature market, helping keep annual holding costs down. As the area develops, this window will not stay open forever.
- Growing tourism demand. Occupancy rates in South Lombok have been climbing steadily, with NTB province recording around 2.09 million tourist arrivals by October 2025.
- Structured investment upside. A well-structured PT PMA can provide tax efficiency, legal protection, and cleaner exit options compared to a personal leasehold.
1. How much is annual property tax in Lombok?
2. Do foreigners pay additional property taxes in Lombok?
3. Do I have to pay taxes if I don’t rent my property?
4. How is the taxable value of property determined?
5. Can I reduce my property tax in Lombok?
Final Thoughts: Is Property Tax in Lombok High?
No. Lombok’s property tax rates are low by any international standard and significantly lower than Bali’s more mature market. The annual PBB on a $200,000 villa typically works out to a few hundred dollars. Purchase taxes (5% BPHTB for the buyer, 2.5% PPh for the seller) are in line with Indonesia’s national framework.
What matters most isn’t just the rates, it’s getting your investment structure right from the start. Whether you’re buying under leasehold or setting up a PT PMA, the tax implications are different and worth understanding before you sign anything.
Looking to invest in South Lombok? Talk to the Nour Estates team. We work with buyers at every stage, from understanding the numbers to finding the right property and connecting you with trusted legal and tax partners on the ground.
About Nour Estates
Nour Estates is a South Lombok real estate agency specialising in land and villa sales for foreign investors, expats, and digital nomads. AREBI certified, locally rooted, and independently operated. We’re here to help you make smart, informed moves in one of Indonesia’s most exciting emerging markets. Contact us today, and let’s start this exciting journey together!
Email: hello@nourestates.com
WhatsApp: +62 853-3713-3898
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