Heaptalk, Jakarta — Finance Minister Sri Mulyani has confirmed that the government will increase value-added tax (VAT) to 12% in 2025 (08/20). However, certain goods and services will not be subject to the 12% VAT, even though the rate will increase next year, based on the Harmonization of Tax Regulations Law Articles 4A and 16B and the Minister of Finance Regulation (PMK) No. 116/PMK.010/2017.
“There are other fiscal instruments, such as VAT exemptions. The public assumes that all goods and services are subject to VAT. Yet, the Harmonization of Tax Regulations Law (UU HPP) clearly states that necessities, education, health, and transportation are not subject to VAT,” said Sri Mulyani in Jakarta.
The Harmonization of Tax Regulations Law Articles 4A and 16B regulate goods not subject to VAT, making them unaffected by the tax increase. Food and beverages from restaurants, hotels, food stalls, eateries, and the like, whether consumed on-site or not, catering services, local tax objects, and regional levies following relevant regulations are included. Money and gold bullion used for the national foreign exchange reserves and securities are also not subject to this new policy.
In addition, according to Minister of Finance Regulation (PMK) No. 116/PMK.010/2017, the following goods are also exempt from VAT:
- Rice and paddy, whether husked, polished, or not, half-milled or fully milled, broken rice, bran, and other rice suitable for sowing.
- Corn, whether shelled or not, including grits and broken corn, excluding seeds.
- Sago in the form of sago pith, flour, powdered flour, and coarse flour.
- Soybeans, whether whole or broken, excluding seeds.
- Consumption salt, whether iodized or not, including table salt and denatured salt for consumption or basic needs.
- Fresh meat from livestock and poultry, with or without bones, that has not been processed, frozen, salted, cooled, pickled, or otherwise preserved.
- Unprocessed eggs, whether salted, cleaned, or preserved, excluding seeds. Fresh milk that has been heated or cooled and does not contain added sugar or other ingredients.
- Fresh fruits that have been picked and processed by washing, peeling, sorting, cutting, slicing, or grading, excluding dried fruits; fresh vegetables that have been picked, washed, drained, frozen, stored at low temperatures, or chopped; fresh tubers that have been washed, peeled, sorted, sliced, cut, or graded.
- Fresh or dried spices, not crushed or pounded; white crystal sugar derived from sugarcane for consumption without added coloring or flavoring.
