Jakarta – Coordinating Minister for Political and Security Affairs (Menko Polkam), Budi Gunawan, appealed to the public not to worry about the policy of increasing Value Added Tax (VAT) to 12%.
Budi emphasized that the 12% VAT rate only applies to luxury goods and services that are generally consumed by the upper class.
“Hopefully with this decision the public does not need to worry. Because the government will continue to strive to improve the welfare of the community,” said Budi.
He also ensured that basic necessities remain free from VAT. 0% VAT remains applicable for non-luxury goods for the general public.
Budi stated that Prabowo’s decision to cancel the implementation of 12% VAT as a whole was a gift to the people ahead of the turn of 2025.
“So, at the beginning of this year, the President also gave a special gift in the form of canceling the VAT increase from the planned 12% to remain at 11%,” said Budi.
President Prabowo previously stated directly that the 12% VAT rate would only apply to luxury goods and services such as private jets, yachts, and fantastically valuable houses.
In a press conference at the Ministry of Finance, he stressed the importance of ensuring that the majority of people are not burdened by the policy.
“I repeat, to be clear, the increase in VAT from 11% to 12% is only imposed on luxury goods and services,” President Prabowo said firmly.
Likewise, the General Chairperson of the Indonesian Employers’ Association (Apindo), Shinta Kamdani, praised President Prabowo’s steps which were considered capable of maintaining a balance between the country’s fiscal needs and people’s purchasing power.
“We welcome the government’s decision to limit the application of the 12% VAT rate to only goods and services that are categorized as very luxurious,” said Shinta.
He assessed that this policy provides clarity for the business world in planning business strategies in 2025.
“This policy keeps people’s purchasing power stable, especially from the lower middle segment,” he said.
He also hopes that the government will continue to provide clear and detailed socialization so that this policy does not cause confusion among business actors and consumers.
“With good implementation, this policy can encourage more positive business prospects and strengthen the contribution of the business world.”