Streamlining Villa Development and Tax Efficiency for Craft Corp Projects: A Case Study
Executive Summary
Hepta Solutions assisted Anje, a villa owner in Bali, in navigating the complex development process of Villa Ladam. Through effective project management, financial guidance, and tax optimization strategies, we helped Anje meet her development goals while minimizing financial burdens, particularly related to property and salary tax payments.
Client Introduction
Client: Anje
Industry: Real Estate/Property Development
Project: Villa Ladam, Bali
Context: Anje is a property owner building a high-end residential villa in Bali with plans to flip the property upon completion. As a foreigner operating in Bali, she needed assistance in managing local tax regulations, overseeing construction progress, and handling financial planning to avoid loan-related risks.
The Challenge
Anje faced several challenges in the Villa Ladam project:
- Tax Compliance: Navigating Indonesia’s property and salary tax regulations.
- Financial Strain: Managing loan repayments while covering the cost of villa development.
- Project Coordination: Handling villa demolition, construction changes, and liaising with contractors remotely.
Without proper management, these challenges could lead to significant delays, extra costs, or even financial penalties.
Goals/Objectives
Anje’s primary goals were:
- Ensure Compliance: Stay compliant with Indonesian tax laws.
- Minimize Costs: Avoid unnecessary tax payments and financial burdens.
- Oversee Construction: Ensure that construction progresses according to plan.
- Manage Loan Payments: Efficiently handle loan repayments and related financial responsibilities.
The Solution
Hepta provided a comprehensive suite of services, focusing on:
Tax Planning and Management:
- Discovered that Villa Ladam was exempt from the 2.2% building tax as the property was under 200m² and classified as residential, saving significant costs.
- Managed salary tax and director drawing payments, clarifying tax responsibilities based on Indonesian regulations and ensuring Anje met all requirements.
Project Management:
- Coordinated demolition (February 2024) and construction work with contractors such as Carlos Bangunan, adjusting construction plans to accommodate Anje’s specific needs, including modifying shelves, cabinetry, and bedroom features.
- Regularly updated Anje through detailed progress reports and facilitated communication via group chats.
Financial Guidance:
- Assisted with salary payment tax calculations and advised on tax payment timelines (December 2024).
- Initiated discussions with tax consultant Pak Made to explore the best loan repayment strategy, ensuring Anje’s financial commitments were met without strain.
Results and Benefits
Hepta Solutions helped Anje achieve the following:
- Tax Savings: Successfully identified a tax exemption for Villa Ladam, saving 2.2% on property taxes. We also optimized salary and director tax payments, ensuring compliance without overpayment.
- Project Coordination: Streamlined communication with contractors, resulting in timely project milestones such as the demolition phase and the start of construction.
- Financial Stability: By carefully planning loan repayment strategies and providing financial advice, we mitigated risks associated with Anje’s loan and development costs.
Key Learnings/Takeaways
- Know Local Regulations: Understanding local tax and property laws can significantly reduce project costs. Villa Ladam’s tax exemption saved Anje substantial amounts in building taxes.
- Effective Communication is Key: Regular updates and open channels with contractors helped ensure the project stayed on track.
- Strategic Financial Planning: Proper loan and tax management can prevent financial strain and keep a project moving smoothly.
Client Testimonial
“Shady from Hepta Solutions has been instrumental in helping me set up my company in Bali, obtain my Kitas and then oversee locating property and building a new villa for investment. He is thorough, organised, trustworthy, timely and professional. I couldn’t recommend him and Hepta Solutions highly enough for operating in Bali.” – Anje
