Jakarta – The government plans to increase VAT by 1% in 2025. The increase is based on Law Number 7 of 2021 concerning Harmonization of Tax Regulations, Value Added Tax (VAT) which will increase by 1% from the previous 11% to 12% in early 2025.
This VAT adjustment is considered to be able to provide benefits to the community. Because, the results of the adjustment will be returned to the people in the form of development to community empowerment.
Finance Minister Sri Mulyani Indrawati assessed that Indonesia’s current VAT rate of 11 percent is still relatively low when compared to other countries, both in the regional area and G20 members.
“VAT in Indonesia is still considered relatively low compared to many countries in the world. If we look at both emerging countries or countries in the region, as well as in the G20,” said Sri Mulyani in Jakarta.
He added that the 1% VAT rate adjustment only targets premium goods and services, such as premium rice, premium fruits, premium meat (wagyu, kobe beef), expensive fish (premium salmon, premium tuna), premium shrimp and crustaceans (such as king crab).
“For example, food consumed by the richest group, namely decile 9-10, we will impose VAT. For example, premium beef, wagyu-kobe, which can cost more than IDR 2-3 million per kilogram. Meanwhile, meat enjoyed by the public ranging from IDR 150,000-IDR 200,000/kilogram is not subject to VAT,” he added.
Coordinating Minister for the Economy, Airlangga Hartarto, said the same thing, that the increase in the VAT rate to 12 percent does not apply to goods and services that are basic necessities such as rice, meat, fish, eggs, vegetables, milk, sugar, education services, health services, public transportation services, labor, financial services, insurance services, polio vaccines, simple houses, and drinking water.
“To maintain people’s purchasing power, especially the lower class, the government is maintaining the 11 percent VAT rate for three important staple commodities, namely cooking oil, wheat flour, and industrial sugar,” he stressed.
Meanwhile, Director of Counseling, Services, and Public Relations, Directorate General of Taxes (DJP), Dwi Astuti said the adjustment of the VAT rate to 12% was in order to realize justice and mutual cooperation. Taxes paid by the community are basically to improve the welfare of the community through government programs.
“The results of the VAT rate adjustment policy will return to the people in various forms. Such as BLT, Family Hope Program, Basic Food Card, Smart Indonesia Program (PIP) and KIP Kuliah, electricity subsidies, 3 kg LPG subsidies, fuel subsidies, and fertilizer subsidies,” explained Dwi.
He added that not all goods and services are subject to VAT. Basic necessities such as rice, grain, corn, sago, soybeans, salt, meat, eggs, milk, fruits and vegetables are exempt from this tax object.
“We need to convey that the main principle of adjusting VAT rates in order to realize justice in the form of siding with the community, as well as mutual cooperation of all elements of the nation,” concluded Dwi.
