Jakarta – The government has officially implemented a 1 percent Value Added Tax (VAT) adjustment which will take effect from January 1, 2025.
This policy is part of the tax reform regulated in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP Law).
Although the VAT rate has increased from 11 percent to 12 percent, the government has emphasized its commitment to maintaining people’s purchasing power and supporting the national economy.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, explained that the government has prepared various incentives to reduce the impact of this increase, especially for low- and middle-income people.
“Until the end of 2024, economic growth will remain at an average of 5 percent. Household consumption contributes more than 50 percent to the Indonesian economy, and growth remains strong, expected to reach above 5 percent,” he said.
Some of the stimulus measures prepared by the government include food aid in the form of 10 kilograms of rice per month for January to February 2025, which will be given to 16 million Food Aid Recipients (PBP).
In addition, the government also provides incentives in the form of Government Borne Value Added Tax (PPN DTP) of 1 percent for products such as wheat flour, industrial sugar, and subsidized oil (Minyakita).
Minister of Finance, Sri Mulyani Indrawati, emphasized that the principle of justice is the basis for implementing this policy.
“Justice is where the capable community groups will pay their taxes according to the obligations under the law, while the disadvantaged community groups will be protected and even given assistance. This is where the principle of the state is present,” said Sri Mulyani.
In addition to these incentives, the government has also extended the validity period of the final Income Tax (PPh) by 0.5 percent for small and medium enterprises (MSMEs) and provided easy access to Job Loss Insurance (JKP) for workers who have been laid off.
Likewise, the Director of Counseling, Services, and Public Relations of the Directorate General of Taxes, Dwi Astuti, explained that various social programs such as Direct Cash Assistance (BLT), Family Hope Program (PKH), Food Cards, to electricity subsidies, 3 kg LPG, and fertilizers will continue to run to protect people’s purchasing power.
“This step aims to protect economic stability while maintaining people’s purchasing power, especially the middle to lower classes,” said Dwi Astuti.
