Jakarta – The Government of the Republic of Indonesia has officially announced the cancellation of the planned increase in Value Added Tax (VAT) rates which was previously planned to come into effect in early 2025.
This decision was taken as a strategic step by the government to ease the burden on the community amidst global and domestic economic challenges that are still not fully stable. In addition, the decision to cancel the VAT increase shows that the Prabowo-Gibran government is sensitive to receiving input from the community.
Minister of Finance, Sri Mulyani Indrawati stated that the cancellation of the VAT increase is part of the government’s efforts to protect people’s purchasing power, especially the lower middle class.
“This decision was taken after considering the national economic conditions that have not fully recovered post-pandemic. We prioritize the welfare of the people amidst global economic uncertainty,” said Sri Mulyani.
The government is also considering the impact of inflation and market uncertainty which could increase pressure on people’s purchasing power.
“With this cancellation, we hope that people can continue their activities normally and keep the domestic economy stable,” he added.
The General Chairperson of the Indonesian Employers’ Association (APINDO), Shinta Widjaja Kamdani, welcomed the government’s steps.
“This policy is very relevant to maintain economic stability amidst the existing challenges. We believe, with this wise step, the Indonesian economy can move more stably,” he said.
On the other hand, the Administrator of the National Conscience Movement (GNB), Lukman Hakim Saifuddin, appreciated the government’s move to cancel the 12 percent increase in Value Added Tax (VAT) rates in its entirety and only impose it on luxury goods.
“I am grateful and thankful for the government’s policy of being willing to cancel the planned 12 percent VAT increase,” he said.
Furthermore, he said that the cancellation of the VAT increase from 11 percent to 12 percent showed that the government was sensitive and willing to listen to input from the public.
Along with the cancellation of the VAT increase, the government will focus on more efficient and fair-based tax reforms. The government also appeals to the public to continue to comply with tax obligations to support sustainable development. In addition, the government is also committed to maintaining people’s purchasing power while ensuring a fairer tax implementation.
This decision is expected to bring long-term economic stability, maintain public trust in the government, and provide space for economic sectors to develop better in 2025.
Meanwhile, after the cancellation of 12% VAT, the government remains focused on pro-people policies, as seen from the policies related to stimulus packages such as rice assistance for 16 million recipients, 50% electricity discounts for small customers, and tax incentives for MSMEs are still being continued so that these policies set by the government are certainly very much appreciated by all elements of society.