Jakarta – The government has decided to cancel the planned increase in Value Added Tax (VAT) rates by 12 percent which was previously planned for early 2025. This decision was welcomed by various parties, especially the public who were worried about the impact of the tax increase on their purchasing power. This cancellation is considered a profitable New Year’s gift for the people amidst the challenges of the global economy which are still uncertain.
Coordinating Minister for Political and Security Affairs (Menko Polkam), Budi Gunawan said that President Prabowo Subianto gave a special gift to the Indonesian people in 2025. The gift was none other than the cancellation of the increase in the Value Added Tax or VAT rate from 11 percent to 12 percent.
“As Mr. Prabowo Subianto’s message before the turn of the year, who hopes that all Indonesian people will be given grace, goodness, peace, and prosperity. So, at the beginning of this year, Mr. President also gave a special gift in the form of the cancellation of the VAT increase from the planned 12 percent to remain at 11 percent,” said Budi Gunawan.
Referring to the statement delivered by the president, Budi Gunawan said that the determination of the 12 percent VAT rate only applies to luxury goods and services that have been consumed by the upper class or the wealthy. Meanwhile, for goods and services that are basic necessities, it does not apply.
“Hopefully with this decision the public does not need to worry. Because the government will continue to strive to improve the welfare of the people and realize an increasingly advanced Indonesia in the future,” explained Budi Gunawan.
According to him, the cancellation of the VAT increase is a step taken by the government to maintain the welfare of the people.
“Public welfare is our top priority. This decision was made by considering the potential socio-economic impacts of the VAT increase that could burden people’s purchasing power, especially the lower middle class,” he said.
Director General of Taxes, Suryo Utomo added that although the cancellation of the VAT increase means an adjustment in state revenues, the government has various alternatives to maintain the country’s fiscal sustainability.
“We will continue to strive to improve tax compliance and efficiency of tax collection through digitalization and a better system. This is an adaptive step that supports Indonesia’s economic recovery,” Suryo said.
Meanwhile, Minister of Finance, Sri Mulyani also emphasized that the cancellation of the VAT increase is part of the fiscal policy that supports Indonesia’s economic recovery.
“We understand the challenges faced by the community. This decision shows the government’s commitment to creating policies that are on the side of the people, especially those who need it most,” said Sri Mulyani.
Sri Mulyani added that although this cancellation would impact state revenue, the government would continue to maintain the sustainability of development programs that are important for the country’s progress.
“Although the VAT rate remains at 11 percent, it is important for all levels of society to support fair and transparent tax policies. We will continue to improve the tax system to ensure that everyone contributes according to their ability,” he added.
The cancellation of the VAT increase of up to 12 percent is the right step amidst the still dynamic economic conditions. By maintaining people’s purchasing power and prioritizing economic stability, the Government continues to strive to create a more prosperous future for the community.
For the public, this cancellation provides relief. Consumer products that are used daily by the public, such as food, clothing, and household goods, can still be reached without significant price increases.
