VAT Rate to Rise by 12 Percent from January 2025 in Indonesia
- Istimewa
Jakarta, VIVA – The government has confirmed that the Value Added Tax (VAT) rate will increase to 12 percent starting January 1, 2025.
Coordinating Minister for Economic Affairs Airlangga Hartarto explained that this adjustment is in accordance with Law No. 7 of 2021 on Harmonization of Tax Regulations (UU HPP).
"According to the mandate of the UU HPP and the determined schedule, the VAT rate will rise to 12 percent as of January 1, 2025," Minister Hartarto stated on Monday (Dec 16).
Despite the increase, the minister emphasized that certain essential goods and services will be exempt from this hike.
"Goods and services vital to the public will either be provided VAT exemptions or a 0 percent rate," he said.
Konferensi Pers Paket Kebijakan Ekonomi untuk Kesejahteraan
- VIVA.co.id/Anisa Aulia
Exemptions include items such as rice, meat, fish, eggs, milk, vegetables, sugar for consumption, as well as education, healthcare, public transportation, labor services, financial and insurance services, polio vaccines, and water usage.
Earlier, Finance Minister Sri Mulyani Indrawati clarified that the 12 percent VAT rate in 2025 would primarily apply to luxury goods.
She mentioned that discussions on the specifics are ongoing and currently in the finalization stage.
"We're formulating the details because this has implications for the state budget (APBN), fairness, purchasing power, and economic growth. Achieving balance is critical," she said on last Wednesday.
Minister Indrawati added that the government is preparing a list of luxury goods subject to the 12 percent VAT rate, which will be announced soon in collaboration with Minister Hartarto.
She stated that feedback from stakeholders suggested the tax should target luxury items consumed by wealthier segments of society.
The government remains committed to implementing principles of fairness, considering legal obligations, public aspirations, and the current economic and fiscal health.
