JAKARTA. The Indonesian government has officially announced an increase in Value Added Tax (VAT) to 12% and will take effect from January 1, 2025.

Airlangga Hartarto, Coordinating Minister for Economic Affairs, said the determination was in line with the Law on Harmonization of Tax Regulations (UU HPP). "In accordance with the mandate of the HPP Law," said Hartarto, in a press conference held today.

In his official statement today, Airlangga added that the VAT increase will only be imposed on goods and services that are classified as luxury or premium. Some of them include premium quality rice, fruit, meat and fish. Then it will also target premium education and health services, as well as electricity rates for customers 3,500-6,600 VA.

In the future, the Government will announce a more detailed list of goods and services subject to 12% VAT.

Meanwhile, the government will bear the VAT benefit of 1% for wheat flour, industrial sugar and Minyakita cooking oil. Then basic commodities such as rice, meat, fish, eggs, vegetables and milk will remain exempt from VAT.

Apart from discussing increasing VAT to 12%, the Indonesian Government also plans to provide food and electricity assistance, as well as tax stimulus for labor-intensive sectors. Not only that, incentives for a number of sectors will also be extended. Starting from incentives for the property sector, hybrid cars, to MSMEs. (KR/LM)