What is KMS? 🤔
KMS (Kegiatan Membangun Sendiri) — construction carried out not within the scope of a construction business by the person/entity doing the building, with the result used by themselves or another party.
KMS can apply to a company if it builds a facility for its own business use (e.g., office, hotel, operational asset), not as goods for sale.
Key feature:
The builder pays the tax (individual or company), even if they are not a VAT taxpayer (PKP).
The key test for KMS — existence of taxable VAT output (PPN Keluaran). If there is no taxable transaction — KMS applies.
Basis: UU PPN Article 16C, PMK 81/2024 (as amended by PMK 11/2025)
Which buildings are taxed? 🏠
A building with three characteristics:
- Construction: concrete, brick, wood, steel
- Purpose: residence or business premises
- Area: ≥ 200 m²
Important:
– Construction can be phased (up to 2 years)
– If longer — each phase is considered a separate building
– Land is not included in the tax calculation
The tax office may aggregate multiple villas as one project (“1 or more buildings”), so the risk of exceeding 200 m² is assessed at the project level.
Basis: PMK 81/2024 Article 323 paragraph (4)-(6)
What is the rate? 📊
PPN KMS rate — 2.2% of construction costs (excluding land)
How it’s calculated:
20% of 11/12 of the PPN rate (which is 12%) = 20% × 11/12 × 12% = 2.2%
Historical reference:
PMK 61/2022: 2.2% (at PPN 11%)
PMK 81/2024: 2.4% (initial formula at PPN 12%)
PMK 11/2025: 2.2% (current)
Basis: PMK 11/2025 Article 324 paragraph (2) jo. PMK 81/2024; DJP press release 18.02.2025
How to calculate the tax? 🧮
KMS base — all construction expenses for each tax period until project completion, excluding land.
Formula:
PPN KMS = 2.2% × (all construction costs, excluding land)
What’s included:
– Materials (concrete, bricks, steel, etc.)
– Labor
– Contractor services
What’s NOT included:
– Land purchase
Example: At 500 million Rp in costs → tax = 11 million Rp
KEY CAVEAT: If another party builds the structure and already charges VAT on those construction works under general rules, the same portion of work should not be taxed again as KMS for the customer. But if the contractor does not charge VAT, the KMS risk for the customer remains.
Important not to confuse this with material purchases: the fact that a material supplier issued an invoice with PPN does not automatically cancel KMS. The exception in PMK is specifically tied to a situation where another party performs construction and VAT on that construction was already collected.
Basis: PMK 81/2024 Article 323 paragraph (7)-(9) and Article 324 paragraph (3)
KMS in Developer Business
Having non-PKP contractors, casual labor wages, and construction material purchases does not create KMS by itself. They form the base only if KMS is already applicable.
– Sale → subject to VAT → no KMS
– Sublease → depends on VAT status (may be KMS or disputable)
For a developer, it’s crucial to separate construction “for sale” from construction “for own retention and operation”.
– If a developer builds as inventory for sale in ordinary course → stronger argument against KMS, as it’s construction within a commercial realization cycle, not self-consumption of the result.
– If a developer retains the building and uses it in their own business (e.g., hotel, villas under operational lease, office) → KMS risk is substantially higher, because the construction result is used by the business itself.
The law does not require already signed sale-purchase agreements to exclude KMS. But in practice, the weaker the evidence that the project is truly being built for sale, the higher the risk of dispute with the tax office.
Basis: PMK 81/2024 Article 323 paragraph (3)
Payment Deadlines and Reporting 📅
When to pay:
From the start of construction until completion
Monthly, by the 15th of the following month
Payment details:
Tax code: 411211
Payment type code: 103
Via SSP (billing code) in Coretax
Reporting:
If you are PKP → file SPT Masa PPN
If you are non-PKP → payment itself is considered the report
Basis: PMK 81/2024 Articles 325, 326, 328; DJP payment code appendix for KAP 411211 / KJS 103
Can the tax be credited/refunded? 🔄
Under current rules, a KMS payment document, if completed according to requirements (including NPWP/NOP), is treated as a tax invoice (Faktur Pajak), and PPN KMS can be input VAT that may be creditable (Pajak Masukan yang dapat dikreditkan) — but only if the general VAT credit rules are satisfied.
Practical conclusion:
– For VAT taxpayers (PKP) → credit may be possible
– For non-PKP → there is essentially no credit/refund mechanism
Additionally, if the building is used in an activity where input VAT is not creditable, there may be no actual benefit from the credit.
Basis: PMK 81/2024 Article 327 paragraph (1)-(2)
Penalties and Risks ⚠️
If you don’t pay on time:
– Tax office will send a written warning
– If underpayment is found → additional assessment + penalties
– DJP may register NPWP unilaterally (if you don’t have one)
PRACTICAL RISK FOR DEVELOPERS: If you claim a project is being built for sale, but in reality most units lack commercial evidence and the project begins to look like an asset for own retention/operation, the risk of reclassification as KMS is higher. This is not a direct PMK norm, but an area of tax dispute based on factual circumstances.
Important: Ignorance of the rules does not exempt you from liability. Even if you’re building a house for yourself — tax must be paid.
Basis: PMK 81/2024 Articles 329-330
💡 Key Takeaways on PPN KMS
Who must pay: Individuals and companies for whom KMS arises under PMK 81/2024 — i.e., when building a ≥200 m² facility for own use/retention or when construction does not pass as ordinary taxable PPN realization within a project.
Rate: 2.2% of costs (excluding land)
When: By the 15th of each month
How: Via billing code in Coretax (411211–103)
Credit/Refund: Possible for PKP under general rules; no separate mechanism for non-PKP
For developers:
– If truly building for sale → stronger position against KMS
– If building for own operation (lease, hotel business, retention) → higher KMS risk
Remember: Even if you are not a VAT taxpayer (non-PKP) — the tax obligation still exists.
Basis: PMK 81/2024 Articles 323-328
