Jakarta – The government has officially set the Value Added Tax (VAT) rate at 12% in accordance with the provisions contained in the Law on Harmonization of Tax Regulations (HPP), which will come into effect in 2025. This step aims to increase state revenues to support national development and strengthen fiscal resilience amidst global economic challenges.
According to the Director General of Taxes, Suryo Utomo, the government hopes that the increase in the VAT rate to 12% will provide a significant contribution to state revenue. This tax policy reform is part of an effort to improve and simplify the tax system in Indonesia, which has so far faced challenges in terms of a narrow tax base and relatively low compliance rates.
“The implementation of the 12% VAT rate is a strategic step taken to boost state revenue. With higher VAT, it is expected to expand the capacity of the state budget to finance various development programs, especially in the infrastructure, education, and health sectors,” said Suryo Utomo.
He added that the public and business actors are expected to understand and comply with this new regulation, with the hope that this change can support the country’s goal of achieving inclusive and sustainable economic growth. In its implementation, various more modern taxation technology policies and systems will also be introduced to increase the efficiency of tax collection.
“With the implementation of 12% VAT, it is hoped that a fairer and more transparent taxation ecosystem can be created, while increasing the capacity of the state budget to finance various development programs that benefit the wider community,” he added.
Previously, the Director of Counseling, Services, and Public Relations of the Directorate General of Taxes of the Ministry of Finance, Dwi Astuti, said that the revenue from VAT was allocated to support various important programs, such as Direct Cash Assistance (BLT), Family Hope Program (PKH), Food Cards, to electricity and 3 kg LPG subsidies.
For your information, the increase in VAT rates applies to almost all goods and services in Indonesia, except for certain goods and services that are exempted or subject to lower rates according to applicable regulations. Several sectors that will receive exemptions or special rates are the education sector, health, and essential goods.
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