Kadin Chairman Highlights VAT Hike on 12 Percent

Jakarta, VIVA – The Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Anindya Bakrie highlighted the government's policy to raise the Value-Added Tax (VAT) to 12 percent, which will take effect on January 1, 2025.

He stated that Kadin Indonesia still needs to study the government's policy on this matter.

Bakrie acknowledged that the government does need to increase the purchasing power of the public to contribute to the target of 8 percent economic growth.

“At Kadin, the stimulus just came out, so we will study it carefully,” Bakrie said on Monday (Dec 16).

"However, what we see is that to achieve this growth, the government certainly wants to strengthen the purchasing power of the public," he added.

Bakrie mentioned that programs promoted by the Prabowo-Gibran administration are aimed at improving public purchasing power while also boosting the effectiveness of government spending.

“The programs that are being launched aim to improve purchasing power to meet the needs, and secondly, to make government spending more productive,” Bakrie emphasized.

Along with this, Kadin Indonesia also hopes that the stimulus provided by the government will balance out the VAT increase, attracting investment, particularly in the industrial sector.

"Because the industry can produce goods, especially those that can be exported. So, this all brings hope, and Kadin, as a strategic partner, is always with the government in terms of stimulus. We also communicate what our colleagues in the real sector are experiencing," he explained.

Earlier, the Coordinating Minister for Economic Affairs, Airlangga Hartarto, assured that the government has prepared various policy packages to maintain public purchasing power.

For low-income households, the government will provide a 1% VAT incentive, meaning they will only be charged a 11 percent VAT rate.

Basic goods that will continue to be taxed at the 11 percent rate include MinyaKita, wheat flour, and industrial sugar.

Other stimuli include food assistance and rice for the first and second income groups, amounting to 10 kg per month.

Additionally, for households with electricity connections below or up to 2200 volt-ampere (VA), there will be a 50 percent discount on electricity bills for two months.

For the middle class, the government will also cover the VAT for property purchases, offering a 100 percent discount for homes with a selling price of up to IDR 5 billion for the first IDR 2 billion, which will be extended.

This incentive will be effective from January to June 2025, and a 50 percent discount will be applied from July to December 2025.