**3. Results and discussion**

#### **3.1 The transfer of rights over land and building through properties exchange**

The transfer of land rights is a legal action intended to transfer the ownership of land to another legal subject [10]. The transfer of land parcels can be carried out by means of sale and purchase, exchange of properties, grant/gifting, asset in lieu of capital injection into a legal entity, as well as other legal actions involving transfer of land rights. Any transfer of land rights shall be proven by transfer deeds made before an authorized Land Deed Official, therefore fulfilling the aspect of absolute necessity in any rights transfer i.e., deeds of land rights transfer made before the authorized Land Deed Official.

The term "exchange of properties" is mentioned in Article 1541 of the ICC i.e., an agreement with which both parties bind themselves to mutually leverage upon another certain goods in exchange for another. Agreement of properties exchange is consensually made, meaning it becomes final and binding the moment agreement is finalized concerning the object matters of the agreement [11].

According to Salim H.S [12], exchange of properties is "an agreement made by one party with another, where one is obliged to hand certain goods over while the other receive another goods in exchange. The goods exchanged can be in the form of movable or otherwise immovable goods. The leverage of movable goods is adequate through real handover or proven by authentic deeds made before a notary public in the form of titled agreement (Indonesian: *perjanjian bernama*), while immovable goods are leveraged in juridical-formal manner or through deeds made before the authorized Land Deed Official". The elements inherent in the above definition are [12]: (a) consent, (b) legal subjects, (c) certain objects, both movable and immovable goods, (d) reciprocal exchange of rights and obligations. In other words, the parties reciprocate in presenting goods which are the objects agreed upon for exchange.

### *Analysis of Transfer Tax Imposition on Properties Exchange in Indonesia DOI: http://dx.doi.org/10.5772/intechopen.112430*

There are notable differences between movable and immovable goods, According to Frieda Husni Hasbullah, immovable goods can be classified into 3 categories [13]: (a) immovable goods due to its nature (Article 506 of the ICC) e.g., land and anything attached or built upon it, trees and other plants which are rooted deep into the land surface, unharvested fruits, as well as raw mining products, (b) immovable goods due to its intended uses (Article 507 of the ICC) e.g., factories and the goods produced, residences and all things affixed on the walls, paintings, jewelleries, those related to land ownership such as certificate of rights over land and building, honey cluster on the trees and fish in the pond, etc.; and (c) immovable goods as stipulated by law (Article 508 of the ICC) e.g., right to use produces, immovable goods, hak pengabdian tanah, hak numpang karang, right to work on land, etc.

Meanwhile movable goods can be divided into 2 categories [14]: (a) Movable goods due to its nature (Article 509 of the ICC) e.g., chicken, goat, books, pencils, tables, chairs, also ships, boats, machines and bathtubs on ship, etc. (Article 510 of the ICC); (b) Movable goods as stipulated by law (Article 511 of the ICC) e.g., (1) Rights to utilize produces and movable goods; (2) rights for promised interests; (3) receivables; and 4) shares in commercial endeavors, etc.

The term "property" is anything that can be possessed or be considered as an object possible for ownership. While real properties are all interests, benefits, and rights pertaining to the ownership of land and building as well as their fixated renovations [3]. Properties can be classified into: (a) tangible assets consisting of real property in the form of land, building, and utilities, and personal properties such as machineries and office utilities, vehicles, and furnitures; (b) intangible assets in the form of goodwill, franchises, trade mark, patent, copyright; (c) valuable notes such as shares, saving accounts, and promissory notes [2]. This text elaborates on the transfer of ownership rights over land and building within the category of immovable goods.

The term for "land" in Dutch *aarde* or *grondgebied*, which holds crucial role in the national development framework, among others in sectors like residences, business district, and shopping centres. The term "land" within the Land Law regime is used in its juridical definition within the limitations set by the Law No. 5 Year 1960 concerning Basic Agrarian Principles, which in Article 4 stated the following:

*Based on the right of control of the State referred to in Article 2, there are defined many rights on the earth surface, which is called land, which can be granted to and owned by person(s), individually or otherwise shared with other person(s) or legal entities.*

Based on the rights of the State to control as shown above and since the use of land is crucial for human life, the possession of land rights is regulated in the Law No. 5 Year 1960 concerning Basic Agrarian Principles, where various land rights have been regulated which are made available to be granted to and owned by natural legal persons or entities in Indonesia, shared or individually.2 The land rights as referred to in Article 4(1) which are further mentioned in Article 16(1) of Law No. 5 Year 1960 concerning Basic Agrarian Principles are as follows3 :

1.The Right of Ownership (in Dutch: *eigendomsrecht*), which is a right to own land [15]. In the ICC, Right of Ownership allows freedom in fully enjoying the function of certain goods and to freely taking actions concerning said goods with full

<sup>2</sup> Ibid.

<sup>3</sup> Ibid., Article 16*.*

independence insofar as such actions align with the prevailing laws, public order, and not in violation of another's rights;

