Jakarta – The government has officially set an increase in the Value Added Tax (VAT) rate from 11 percent to 12 percent which will take effect starting January 1, 2025.
This policy aims to strengthen state revenues and ensure a just economic balance.
Finance Minister Sri Mulyani Indrawati emphasized that the principles of justice and mutual cooperation are the basis of this policy.
“Justice is where groups of people who are able will pay their taxes according to their obligations under the law, while groups of people who are unable will be protected and even given assistance. This is where the principle of the state is present,” said Sri Mulyani in her written statement.
This VAT rate adjustment is designed to maintain the bias towards the community.
Basic necessities, education, health, and public transportation goods and services remain free of VAT.
In addition, to ease the burden on industry and maintain price stability, the government will bear 1 percent VAT on several industrial necessities, such as wheat flour, industrial sugar, and Minyak Kita, through the Government Borne Tax (DTP) scheme.
Head of the Fiscal Policy Agency (BKF), Febrio Kacaribu, revealed that this tariff adjustment will make a major contribution to state revenue, which is estimated to reach IDR 75 trillion.
“From this VAT increase, the estimated revenue is estimated to reach IDR 75 trillion. This will help strengthen our fiscal next year,” explained Febrio.
However, he emphasized that this policy still considers the principle of justice.
VAT on basic necessities such as rice, eggs, and meat remains exempt so as not to burden low-income people.
The Indonesian Tax Consultant Association (IKPI) also expressed support for this policy.
Head of the Fiscal Policy Research and Assessment Department of IKPI, Pino Siddharta, assessed that this step is a strategic effort to strengthen the national taxation system.
“This increase is part of the government’s efforts to strengthen the foundation of the economy. However, its implementation must consider the balance between tax obligations and convenience for taxpayers,” said Pino.
As a mitigation effort, the government has prepared a comprehensive stimulus package.
Some of these programs include social protection, such as food assistance and electricity discounts for low-income communities, PPh Article 21 DTP incentives for workers in labor-intensive sectors, and an extension of the 0.5 percent Final PPh rate for MSMEs.
The total allocation of tax incentives in 2025 is estimated to reach IDR265.6 trillion.
Sri Mulyani emphasized that this policy is designed to maintain a balance between economic growth, community protection, and fiscal sustainability.
“This is a complete package. By continuing to look at the data, listen to input, and maintain balance, we ensure that taxation functions as an instrument of justice and mutual cooperation,” she concluded.
